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U.S. July CPI will be released at 20:30 Beijing time tonight.
Market expectations
Headline CPI to rise 0.1% month-on-month and 3.4% year-on-year, versus 3.5% previously
Core CPI to rise 0.2% month-on-month and 2.5% year-on-year, versus 2.6% previously
The market is currently pricing nearly even odds of a rate hike in September. This CPI report will significantly impact rate-hike expectations, but PCE, nonfarm payrolls, and August CPI are still due before the September meeting.
If the data comes in below expectations, risk assets will likely benefit; if it exceeds expectations, the U.S. dollar

The probability of a Fed rate hike in September briefly fell from above 60% to around 36%
The main reason was that U.S. July nonfarm payrolls came in far below expectations
July nonfarm employment decreased by 23k, while the market had expected an increase of 80k
Meanwhile, the May and June employment figures were revised down by a combined 103k
These data indicate that the U.S. labor market is cooling
If the Fed continues raising rates, it could further pressure the economy and employment, so the market quickly lowered its expectations for a September rate hike
The next key focus is the CPI r