Daily Economic Outlook: 17th August, 2015

The key US releases will be Wednesday's CPI inflation figures for July and the minutes of the July policy meeting. Headline inflation has hovered around zero since the turn of the year on the back of last year's fall in oil prices and rise in the US dollar. Although the retrenchment of oil prices since July could feed through to the July figures, a repeat of June's 0.1% y/y print is expected, while the core rate, which strips out energy and food prices, is expected to edge upwards to 1.9%, states Lloyds Bank. 

Meanwhile, the FOMC minutes will heavily pored over for clues on how much weight the Committee place on the current weakness of inflation, which could be further prolonged by the recent subsidence of oil prices, and signs that economic activity has firmed over the last few weeks. 

"Today's U.S. Empire manufacturing survey and NAHB housing market index are expected to add to the evidence of a steady pickup in activity at the start of Q3. Likewise, UK headline inflation (Tue) is expected to remain flat while rising real incomes should help to support a rebound in retail sales (Thu). Meanwhile, the preliminary euro area PMIs (Fri) could show a response in sentiment to the recent rise in uncertainty about the global outloo", says Lloyds Bank.

The ripple effects of last week's CNY devaluation on US monetary policy are likely to remain for some time. Consequently, this week's US data will face particular scrutiny ahead of the September FOMC meeting where a hike in the policy rate remains on the cards.