The market seemed to be worried that Fed's dissenters may affect the central bank's decision to expand quantitative easing. Stocks in Asian and European session declined amid concerns on rising global economic uncertainties. In the commodity sector, oil prices retreated as demand might be affected by deteriorating growth outlook while gold firmed on safe-haven demand.

While this week is a rather quiet one, investors are awaiting the Jackson Hole economic policy symposium to be held on August 26. The market anticipated the Fed Chairman Ben Bernanke would hint additional easing at his speech after announcing at the August FOMC meeting that the Fed funds rate will stay at exceptionally low levels at least through mid-2013. Yet, the central bank's move forward to QE3 is not without resistance. Indeed, Dallas Fed President Fisher, Minneapolis Fed President Kocherlakota, and Philadelphia Fed President Plosser preferred to keep the 'extended period' reference instead of stating the timeframe. As we mentioned earlier today, both Philly Fed President Plosser and Dallas Fed Fisher were against that the Fed used easing measures to boost the stock market.

Potential stimulus from the Fed also triggered criticism from Republicans. Texas Governor Rick Perry said any move by Bernanke to act on stimulus measures before the 2012 election would be 'almost treasonous'. While the Fed pledged its independence to politics, the 'threatening' language inevitably raises hurdles for the Fed to move further to the path of easing.

On the dataflow, weaker-than-expected retail sales in the UK signaled worsening consumer confidence. Retail sales climbed +0.2% m/m in July, following an upwardly revised +1% in June. From a year ago, sales contracted -0.2%, compared with consensus of +0.1% and June's +0.2%. Excluding auto fuel, retail sales in July eased to +0.2% and +0.0% on monthly and yearly basis respectively. In the US session, July's CPI probably rose +0.2% m/m after slipping -0.2% in June. Core inflation might have eased to +0.2% in July from +0.3% in the prior month. Initially jobless claims probably increased +5K to 400K in the week ended August 13. Existing home sales is expected to have gained +2.73% to 4.90M in July while Philly Fed Index climbed higher to 3.9 in August from 3.2 a month ago.