But the main focus for the market today is of course the decision of the FOMC meeting. Will it be a 25bps cut or a 50bps cut? That is the question.
As it stands, traders are still pricing the probability of a 50bps cut today at around 65%, and therein lies the balance of risks ahead of the Fed's policy decision.
Yesterday's US retail sales numbers helped the dollar recover somewhat along with yields. But this week may be a tentative one. Will the Fed stick to its communications since Jackson Hole and deliver a 25bps hike? Or will a 50bps hike be more comfortable as a little insurance?
USD/JPY has already given back most of its overnight gains and is currently back down to the 141.30 level. This has been the main mover today, with other dollar pairs remaining cautious as they await the Fed announcement.
Turning to European trading, inflation has once again become a hot topic in the UK and the Eurozone.
The former will generate some intrigue ahead of the BOE's decision tomorrow, but overall it should be an irrelevant factor. UK annual headline inflation is expected to remain at 2.2%, while core annual inflation is expected to rise to 3.5%. So the market's expectation that the BOE will keep rates on hold tomorrow would be correct.
The eurozone figures are likely less significant as they will be the final data for August, and the ECB has already signalled it will pause interest rates in October anyway.
0600 GMT – UK August CPI Statistics
0900 GMT – Eurozone August CPI final reading
1100 GMT – US MBA Home Loan Application September 13
That's all for the next few sessions. I wish you all the best in the coming days and good luck with your trading. Take care.
