Talking Points:

Pound Unlikely to Find Lasting Fuel in UK CPI with Scotland Vote in Focus
US Dollar Volatility Risk Favors the Downside as PPI Report Lines Up Ahead
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Augusts’ UK CPI data headlines the economic calendar in European hours. Expectations call for the headline year-on-year inflation rate to fall to 1.5 percent, revisiting the five-year low recorded in May. UK price growth data has increasingly underperformed relative to expectations over recent months, opening the door for a downside surprise. While such an outcome is likely to weigh against BOE interest rate hike bets and put pressure on the British Pound, follow-through is likely to limited as traders wait for the outcome of Thursday’s Scottish Independence Referendum before demonstrating directional commitment.

Later in the day, the spotlight shifts to the US PPI report. Economists are looking for a pickup in wholesale inflation, with the year-on-year rate forecast to tick higher to 1.8 percent. If the release is to generate meaningful volatility, the probability that the US Dollar is left weaker thereafter seems asymmetrically higher than the alternative. An upbeat result would do little to materially amplify already strong speculation that rhetoric from the Federal Reserve will take a hawkish turn at this week’s FOMC meeting. On the other hand, a soft print would arrive after the greenback secured six consecutive days on the upside and set a new 13-month high, an environment that seems increasingly primed for a correction.

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Asia Session

GMT

CCY

EVENT

ACT

EXP

23:30

AUD

ANZ Roy Morgan Weekly Consumer Conf.

111.3

–

113.3

1:30

AUD

RBA Releases Sep Meeting Minutes

–

2:16

CNY

Foreign Direct Investment (AUG)

-14.0%

0.8%

-16.9%

4:00

JPY

Tokyo Condominium Sales (YoY) (AUG)

-49.1%

–

-20.4%

European Session

GMT

CCY

EVENT

EXP

IMPACT