All eyes will be on the US inflation figures tonight, the important macro data of the week, as it will go a long way to settling or further upsetting market nerves about upcoming Federal Reserve interest rate moves.
With US inflation at its highest level in more than 40 years, the Fed is aggressively raising rates to combat inflation, hiking four times in 2022 to reach 2.25%.
A stronger than expected print for the US consumer prices index could rock stock markets, while a decline would deliver a boost, especially after a surprisingly good non-farm jobs report last Friday.
A month ago, figures for June showed US CPI hit 9.1%, sparking concern that the Fed might be tempted to go for a bigger than expected 1% rate move at last month's policy meeting, though a 0.75 percentage point move was eventually seen as sufficient.
For July, the market expects CPI to fall to 8.8%, with core prices expected to rise from 5.9% to 6.1%.
If Wednesday’s CPI doesn’t reveal some slowing in prices, expectations will again rise for a big Fed rate hike in September.
Marshall Gittler, head of investment research at BDSwiss, said: "Note by the way that the Cleveland Fed’s Nowcast forecast for the headline CPI is 8.82% for today’s July figure and 8.76% for next month’s August figure.
"What that means is that the market may be braced for a higher-than-expected figure and so the surprise from a lower-than-expected figure would be bigger than the surprise from a higher-than-expected figure."