US CPI Data Due This Week: What Markets Can Expect

Financial markets are bracing for the release of US Consumer Price Index (CPI) data on Wednesday, which is expected to provide clues about the Federal Reserve's interest rate path. The July CPI report is forecast to show a modest increase in prices, with economists predicting headline inflation will rise 0.1% month-over-month and core inflation will increase 0.2%. While these readings remain above the Fed's 2% target, another month of subdued price growth could strengthen the case for policymakers to keep interest rates unchanged.

Vanguard economist Adam Schickling believes that inflation continues to trend in a positive direction, moving gradually closer towards the Fed's 2% target. However, Joe Brusuelas, chief economist at RSM, said that a report broadly matching expectations would likely reinforce the Federal Open Market Committee's decision to remain patient.

JPMorgan's trading desk has outlined five scenarios for the S&P 500's reaction to Wednesday's CPI report, with the most likely outcome projected to lift stocks by 0.25% to 0.75%. The US dollar edged 0.1% higher in Asian trading, while oil prices moved higher due to renewed geopolitical tensions in the Middle East.