US CPI the main event this week

<p>There has not been any bigger data than CPI releases in the past few months and the mother of all of that is the US CPI. That will be released later this week on Wednesday, 12 July. The estimates are showing that headline annual inflation is expected to decline further in June to 3.1% from 4.0% in May:</p><p>However, core annual inflation is estimated to keep on the higher side at 5.0% in June – down slightly from the 5.3% in the month before.</p><p>As far as big data goes, this one is a mightily important one as it will set out expectations on what the Fed might do later in the month. Fed funds futures are showing that odds of a 25 bps rate hike are at ~92% currently. If the CPI data comes in below estimates, we could see pricing for that shift quite dramatically during the week.</p><p>Also, keep in mind that the Fed blackout period will begin on 15 July (after this coming Friday) so that leaves very little time for policymakers to try and steer markets in the "right" direction.</p><p>For now, risk tones are also continuing to keep on the softer side and it is unlikely things will change too much before we get to the main event above.</p><p>Besides that, there will also be the UK labour market report as well as two big central bank decisions in the RBNZ and BOC.</p>

This article was written by Justin Low at www.forexlive.com.