The dollar finally corrected after charging higher for a month. The appreciation faded overnight after Jerome Powell’s latest hawkish comments failed to support it at short-term overbought levels. Europe’s energy ministers meet for crisis talks in Brussels, but are unlikely to agree much. U.S. stocks are expected to have their first positive weekly close in four weeks, after DocuSign (NASDAQ:DOCU) and Zscaler (NASDAQ:ZS) surprised positively with results. And China’s inflation eases under pressure from a weak economy, which is also weighing on global oil demand. Meanwhile, the Brazilian market is expecting deflation in August.

Here’s what you need to know in the financial markets on Friday, September 9th.

  1. August IPCA
    The Brazilian Institute of Geography and Statistics (IBGE) will release the August Broad Consumer Price Index (IPCA) today at 9am. The average of the analysts’ estimates compiled by is of a monthly deflation of 0.39%, after a retreat of 0.68% in July. Thus, the accumulated figure for the last 12 months would be 8.72%, against 10.07% a month earlier.

The result would be close to the IPCA expectation for 2022, disclosed by the Focus Bulletin this week, of 6.61%, but still far from the inflation target of 3.5% for this year and the goal ceiling of 5%.

Rafael Pacheco, chief economist at Guide Investimentos, believes that the IPCA for August should still show a drop due to the reduction in ICMS rates and fuel prices by Petrobras (BVMF:PETR4), even if the negative variation is smaller than last month.

The release will be important for the Monetary Policy Committee’s (Copom) decision, which sets the interest rate in a meeting later this month.

At 08:15 the ETF EWZ was up 1.64% in the US pre-market.

  1. Dollar correction
    The dollar finally corrected, falling 1% after a month-long rally in which market participants had to further raise their forecasts for US interest rates.

Momentum reversed after the dollar failed to make new highs in response to hawkish (now familiar) comments on Thursday from Federal Reserve Chairman Jerome Powell, who said at a Cato Institute event that: “We need to act now, frankly, strongly, as we are doing and we need to continue until the job is done.”

Crosses were supported by the European Central Bank’s biggest interest rate hike in its 23-year life and the promise of more by its president, Christine Lagarde.

At 08:17, dollar index futures retreated 0.86% to $108.765.

Meanwhile China continued to offer the world inflation relief. Its producer prices, which feed (at least partially) into export prices with a certain lag, rose just 2.3% in the year to August, its lowest reading in 18 months and well below analysts’ expectations.

Consumer price inflation also eased, with prices falling 0.1% in the month to reduce the annual rate from 2.7% to 2.5%.

Chinese stock indexes rose as much as 1.7%, while the yuan extended its rally against the dollar, gaining 0.5% after bouncing off a major support level of 7 per dollar on Thursday.

  1. Europe’s energy ministers meet for crisis talks
    Energy ministers from across the European Union meet to take steps designed to reduce frighteningly high energy and natural gas prices before next winter.

Difficult decisions are unlikely, given differences among various member states over how best to reduce demand and how to impose the proposed price ceiling on what remains of the bloc’s gas imports from Russia. EU Energy Commissioner Kadri Simson said before the meeting that she expected progress toward a consensus, but indicated that plans can only be finalized at another meeting next week.

However, wholesale market prices continued to fall, with the benchmark Dutch TTF Natural Gas Futures falling 5.3 percent to 208.80 euros per megawatt-hour. Baseload energy prices, meanwhile, have declined by about 20 percent over the past week.

  1. US stocks to open higher

US stock markets are expected to end the week higher for the first time in four tries as sentiment strengthens after pricing in a higher US rate path.

At 08:20, Nasdaq 100 futures were up 1.13%, while the S&P 500 and Dow Jones gained 0.87% and 0.79%, respectively.

Stocks to watch later include DocuSign, which is higher in the pre-market after finally publishing an earnings update with enhanced guidance, while cybersecurity company Zscaler is also up after beating expectations on Thursday. Smith & Wesson (NASDAQ:SWBI) is heading in the other direction after a disappointing report.

Kroger is the big name which is expected to release its balance sheet on Friday.

  1. Oil jumps as the dollar weakens

Crude oil prices rose as the dollar weakened, taking pressure off non-dollar-based importers around the world.

At 08:24, US oil futures were up 1.98% at $85.19 a barrel, while Brent futures advanced 1.99% to $90.92. Both contracts are still on course for the lowest close in seven months, however, with Covid blockades in China again weighing on sentiment.

The consultancy Energy Aspects assesses that Chinese oil consumption may fall this year for the first time since 2002, by an average of 380,000 barrels per day. This is partly due to the latest wave of covid-19 outbreaks that will affect next week’s Golden Week holiday, a time when hundreds of millions of Chinese travel.

Data from Baker Hughes rig count and CFTC positioning round out the week ahead.