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Day Ahead: Top 3 Things to Watch

Published 2019-09-11, 03:49 p/m
Updated 2019-09-11, 05:02 p/m
© Reuters.

Investing.com - Here are the top 3 things that could rock markets tomorrow.

1. Last Inflation Numbers Ahead of Fed

Market participants look ahead to the release of consumer inflation data due Thursday at 8:30 AM ET (12:30 GMT).

Economists forecast that overall inflation measured by the consumer price index (CPI) in August slowed to 0.1% from 0.3% the prior month, while the core CPI, which excludes volatile food and energy price, slowed to 0.2% from 0.3% a month earlier.

That would bring year-over-year CPI growth to an unchanged 1.8% and core CPI growth a notch higher at 2.3%.

The consumer inflation report is due a day after the core producer price index topped economists’ forecasts.

The slow pace of inflation was one of the underlying concerns highlighted in the Fed’s July meeting, when the central bank cut its benchmark rate. At its next meeting Sept. 17-18, the Fed is widely expected to cut rates again.

The weekly report on initial jobless claims is also due at 8:30 AM ET.

The forecast of economists polled by Investing.com is for a downtick to 215,000 from 217,000 the prior week.

2. OPEC and Allies Gather in Abu Dhabi

OPEC and its allies meet on Thursday in Abu Dhabi to review the cartel's oil production strategy.

The UAE’s Energy Minister recently vowed to get all members to commit to curbs, but said there is no recommendation to make deeper cuts despite concerns about oil-demand growth in the face of weakening global economic growth.

But the action from OPEC to boost prices looks limited, according to Goldman Sachs.

"With crude oil well below Saudi Arabia’s target of ($80 per barrel), we feel they have no choice but to continue the current production cut agreement to help support current prices," Goldman said in a recent note. "The ability for OPEC to push prices higher looks limited."

Crude oil pared some early-week gains over the past two days as traders fear the Trump administration may be looking to meet with Iran, with a view to a potential deal that could lessen sanctions on the Islamic Republic. That could lead to an uptick in global crude supply.

Asked if he would consider easing sanctions on Iran, Trump on Wednesday replied: “We’ll see what happens.”

Oil prices started the week on the front foot, buoyed by expectations that Saudi Arabia may adopt more aggressive cuts following the appointment of new oil minister Prince Abdulaziz bin Salman. The prince said, however, that there would not be a radical change in the country's oil policy.

Crude oil fell nearly 3% to $55.75 a barrel Wednesday in the U.S. Brent crude fell $1.57, or 2.5%, to $60.81 a barrel. Brent is the global benchmark crude.

3. It’s ECB Day!

The European Central Bank is set to decide on monetary policy Thursday at 07:45 AM ET (11:45 GMT), with the central bank expected to reveal easing measures to tackle economic troubles brewing in the eurozone.

Expectations for aggressive monetary policy easing measures, however, have cooled in recent weeks. But ECB President Mario Draghi - in what will be his penultimate outing before Christine Lagarde takes the helm - is likely to unveil a fresh stimulus package after laying the groundwork at his last press conference.

With little improvement on the pace of eurozone economic growth and inflation and the option of a no-deal Brexit on the table, Draghi will have to follow up with some sort of action, Action Economics said in a recent note.

The ECB economy grew 0.2% in the second quarter and the region’s largest economies, Germany and France, saw a 0.1% decline and a 0.2% rise for the quarter respectively.

“Most are expecting a 10 bp cut in the deposit rate, which would leave it at -0.50%. The repo zrate, currently at 0.00%, is likely to be kept on hold for now,” Action Economics added.

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