"Consensus expects a 9% year/year decline in S&P 500 EPS driven by flat sales growth and margin compression," noted analysts at Goldman Sachs.
Markets still think the Federal Reserve is likely to hike rates later this month, but a weak CPI might lessen the risk of yet a further move in September. Fed officials have been mostly hawkish in their communications, while markets have also priced in higher rates in Europe and the UK. Canada's central bank meets this week and markets imply a 67% chance of another hike.
The net result was a rush to close yen short positions which saw the Japanese currency rally across the board last week, though it was struggling to sustain the rally on Monday.
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