Inflation reports usually mean a lot to central bank policy, but this is not the case with the US CPI for August. The Fed focused on labor data and hinted at lack of response to moderate price overheating. Consequently, small deviations from consensus inflation forecast today will certainly not change the views regarding September Fed meeting.

The dollar index could not go much higher yesterday than the high of the last week (the level of 92.86) and went to support at 92.50. In overall, the main currencies cannot determine their direction on Tuesday, commodity currencies are under pressure in a pair with the dollar, and in EM there are signs of a sale - RUB, ZAR, INR, MXN are in the red against the dollar. Uneven sentiment on the PRC economy hits the AUD, which has been declining for two weeks and continues to look down.

The main event of today is the US inflation report for the previous month. The consensus on the dynamics is extension of the pullback from the highs of 5.4% reached in June and July. However, the decline is expected to be insignificant - only 0.1% in core and broad inflation. The main question is what the market will react to and what will pass by. Taking into account the increased "tolerance" of the Fed to inflation, a jump in inflation to 6% will allow counting on tightening in September, and at the end of the year - a drop below 5%. In addition, the Fed has shifted its focus to labor data and is not particularly worried about short-term inflation, especially in light of persisting bottlenecks on the supply side. Inflation in the consensus area is unlikely to lead to a shift in market expectations and the market focus will shift to the data on retail sales in the US, which is scheduled for release on Thursday.

Sellers are increasing their influence in EURUSD again after yesterday's rebound from the level of 1.1770. If the CPI release could increase the chances of a September tightening of the Fed's policy, a wave of selling could push the pair back to support at 1.175, where it will be possible to consider the completion of the downward correction for the pair: