Economic calendar: US CPI August report in the spotlight on Wall Street

• Weaker sentiment at the European stock market open, following a mixed session on Wall Street and declines in Asian equities
• Japanese yen strengthens on the wave of comments from the BoJ's Nakagawa and the expected change of dynamics in Fed policy 
• Investors await CPI data from the United States, for August (1:30 PM BST) - the central macro reading of the day

Global investors are awaiting the release of the CPI inflation report from the US today, although its release may bring uncertainty to the market-especially given the prevailing mood and the fact that, somewhat spooked by a weakening labor market, investors would like to see the Federal Reserve cut rates as soon as possible. The reaction could be greater the more the reading differs from the consensus. In this case, a rise in inflation could spook investors and cause a drop in the expected scale of Fed monetary easing (and a strengthening of the dollar and a likely rise in USDJPY).

On the other hand, a strong drop in oil (and fuel) prices may cushion any 'disappointment' with the CPI increase and make the market read the higher data rather as evidence that the economy is not weakening very much. In contrast, a much lower CPI, than expected data could lead to increased concerns about the actual health of consumers. This scenario for the indexes does not seem positive either, although it could prompt the Fed to make a 50 bp move on the September meeting.

Investors will likely look quickly inside the report and keep a close eye on which inflationary segments contributed to price declines, or increases. If much lower gasoline prices will support lower CPI data, with no 'economic demand concerns'  - it should be the 'best scenario' for Wall Street. At the moment, the reaction to the report remains uncertain, and it is likely that the uncertainty on stock market indices will linger until 1:30 PM BST. After yesterday's nearly 5% drop in oil, investors will be looking closely at the change in inventories according to the EIA, where investors expect a flat reading for gasoline stocks and an increase in crude oil inventories of more than 1 million barrels, after a nearly 7 million drop previously.

Macro calendar

1:30 PM BST, USA - CPI inflation for August. Expected: 2.5% y/y Previously: 2.9% (forecast: 0.2% m/m vs. 0.2% previously)

• Core CPI inflation. Expected: 3.2% y/y Previously: 3.2% (forecast 0.2% m/m vs. 0.2% previous)

3:30 PM BST, Change in crude oil inventories according to US EIA: 1.05 million barrels vs -6.87 million barrels previously

• Change in gasoline inventories: 0 million barrels vs 0.84 million barrels previously
• Change in distillate inventories: 0.27 million barrels vs -0.37 million barrels previously