Markets Eye US Inflation Readings and Fed Minutes Amid Global Economic Uncertainty

The US is set for a key inflation reading and Fed minutes release, which could influence market expectations. The July headline inflation rate in the euro area is expected to confirm the flash estimate at 2.9% y/y, while core inflation is predicted to be 2.5% y/y.

Wage developments will also come under scrutiny with the release of Eurostat's Q2 Labour Cost Index (LCI), which measures labour costs per hour worked but may not align with the ECB's preferred gauge of wage growth.

The UK's July CPI is due, and while headline inflation has been on a disinflationary trend since autumn, it remains above target at 2.6%. The PMI survey suggests price pressures have eased further in July, but new energy price caps are set to pull headline inflation higher to 2.9% y/y.

China is expected to keep its Loan Prime Rates (LPRs) unchanged for the 1-year and 5-year LPRs overnight, as the People's Bank of China signals room for easing but typically lowers the reverse repo rate before adjusting the LPRs.