What are the main events for today?

The European session will see the release of low-tier indicators which shouldn’t matter much. In the American session, we get the Canadian GDP, the US PCE and final UMich Consumer Sentiment report. These releases shouldn’t change the markets expectations. The real action will be the next week with the release of the ISM Manufacturing PMI and the NFP report.

12:30 GMT/08:30 ET – US August PCE

The US PCE Y/Y is
expected at 2.3% vs. 2.5% prior, while the M/M figure is seen at 0.1% vs. 0.2%
prior. The Core PCE Y/Y is expected at 2.7% vs. 2.6% prior, while the M/M
reading is seen at 0.2% vs. 0.2% prior.

Forecasters can
reliably estimate the PCE once the CPI and PPI are out, so the market already
knows what to expect. Fed’s Waller last Friday mentioned that they
expect 0.14% on the Core M/M measure.

The main focus for
the Fed in the last months has been the labour market, so inflation data lost a
bit of its importance in terms of market reaction.

Interestingly
tough, Fed’s Waller mentioned that the inflation data during the
blackout period pushed him in favour of the larger cut. He added that
what’s got him more worried was that inflation was running softer than he expected.

Finally, he said
that he was in favour of two more 25 bps cuts by the end of the year if the
economy evolved as he expected, but if the labour market data worsened, or
if the inflation data continued to come in softer than everybody expected, then
he would support going at a faster pace before adding that a fresh
pickup in inflation could also cause the Fed to pause its cutting.

Today’s release
shouldn’t be important given that it’s August data and it was already incorporated
into the last Fed’s decision.

Central bank speakers:

• 07:15 GMT – ECB’s Rehn (neutral – non voter in Oct)
• 08:15 GMT – ECB’s Lane (dove – voter)
• 09:40 GMT – ECB’s Cipollone (dove – voter)
• 11:15 GMT/07:15 ET – ECB’s Nagel (hawk – voter)
• 13:30 GMT/09:30 ET – Fed’s Collins (neutral – non voter)
• 17:15 GMT/13:15 ET – Fed’s Bowman (uber hawk – voter)

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