The key US data release today is the ISM non-manufacturing index (16:00 CET). The index fell from 55.5 to 51.4 in August, the lowest level since the crisis. As the US service sector has been the main (only) driver of growth, it will be very important to see whether this low level was just a 'one off' or whether the signals of weak growth in the service sector persist. We expect the index to moderate higher and look for a reading of 52.5 in September. In addition, the ADP report (14:15 CET) could attract attention, as it may provide clues on the strength of Friday's jobs report.
In the euro area, August retail sales are due to be released at 11:00 CET. The retail sales figures have been solid on a yearly basis, however, this needs to be seen in the light of the low oil price. Looking forward, we expect gradually decreasing retail figures for the euro area as the continual improvement in the labour market has plateaued and the higher inflation will weaken the real wage. This is also reflected in the latest retail figure for Germany.
In the UK, PMI services is due out at 10:30 CET. Given that PMI services is back to the pre-vote level, we do not think it can go much higher and expect it to stay around the current level (52.9), suggesting that the service sector continues to grow at a decent pace even after the UK's vote to leave the EU.
The National Bank of Poland (NBP) set to keep its policy rate unchanged today.The rate has been kept unchanged at 1.5% since March 2015 and at the previous meeting in September, central bank governor Adam Glapinski struck a hawkish tone, stating that there is 'no temptation' to cut interest rates, hinting that it could start rate increases near the end of 2017 on rising inflation. We expect the NBP to stay put for the time being.
Swedish industrial orders and production data (09:30 CET) are the highlights in Scandi markets today. Swedish service PMI and Danish house price data are also due out.
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