Commerzbank FX analyst Antje Praefcke notes that July US inflation is expected to rise only 0.1% month-on-month, with headline and core rates slipping to 3.4% and 2.5% year-on-year. She argues the Federal Reserve is unlikely to hike in September, but markets may adjust rate expectations and Dollar direction depending on the data and ongoing Middle East developments. "The possibility of an interest rate hike as early as September is likely off the table, as the FOMC will probably want to wait for more data showing that inflation is trending downward before ultimately deciding against a hike altogether." "Should the inflation data come in weaker than expected, the market is likely to scale back its expectations further, which in turn would weigh on the dollar." "In the alternative scenario - which we consider less likely - the market could see its assessment further confirmed, raise its expectations for an interest rate hike again, and thereby also provide a boost to the dollar."