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)
