The European session is once again empty and all the focus will be on the US CPI report in the American session. Inflation data is now less important than the labour market and growth data, but it could still have a say in the market’s pricing, especially for the next week’s FOMC decision.

12:30 GMT/08:30 ET – US August CPI

The US CPI Y/Y is
expected at 2.6% vs. 2.9% prior, while the M/M measure is seen at 0.2% vs. 0.2%
prior. The Core CPI Y/Y is expected at 3.2% vs. 3.2% prior, while the M/M
figure is seen at 0.2% vs. 0.2% prior.

The Fed is now
focused on the labour market, and they’ve even stated that upside surprises in
inflation won’t change their overall outlook. Therefore, inflation reports have
less significance at the moment although I’d say that a soft report will likely
push the expectations for a 50 bps cut back around 50% as it would give the
Fed a stronger excuse to deliver a 50 bps insurance cut.

This article was written by Giuseppe Dellamotta at www.forexlive.com.