U.S. inflation reading could influence September rate outlook

A July measure of U.S. consumer inflation is expected Wednesday as investors assess the Federal Reserve’s next policy move. The core Personal Consumption Expenditures index, which excludes food and energy, is projected to rise 0.2% from June and remain at 3.3% annually—above the Fed’s 2% target.

The release will come alongside initial second-quarter GDP and durable-goods data, which could limit the inflation report’s effect on currency markets. Futures markets put the odds of a quarter-point rate hike in September at 38%, down from 55% a month earlier.

Investors are also focused on Friday’s central-bank meeting, where Fed Chairman Kevin Warsh is expected to offer clues about the near-term policy outlook. The dollar has declined this month amid weaker employment data and changing expectations for interest rates.

Read the full story at fxstreet.com.