In short: I’m expecting CPI to run hot this morning. Buy USD, sell Euro and Yen, and sell stocks.
The dollar should get a boost – the degree of strength will depend on the internals of the report, principally wages/benefits. We should see the EUR/USD cross sell off. Even with inline prints (-0.1% mom headline and +0.2% mom core) we’ll still see yoy readings of +1.3% headline and +2.1% core. This is squarely bad news for stocks, as an additional rate hike will need to be priced into market expectations.