In the eurozone, the August services PMI is expected to be unrevised from the preliminary estimate of 54.3, while retail sales are forecast to rebound in July following the contraction in June. The Riksbank is seen keeping its key rate unchanged at -0.35%, with an outside chance of a further reduction.
A busy day looms starting with the UK services PMI survey, followed by the ECB monetary policy announcement and press conference. Sweden's Riksbank policy decision and eurozone final services PMI and retail sales are also due, as are the US trade balance and non-manufacturing ISM survey.
"With the UK services PMI falling more than expected in July to 57.4 (though still signalling a robust pace of growth), the market median forecast is for a partial recovery to 57.7 in August. Given the recent rise in global economic uncertainties, the risks are assumed to be slightly to the downside and have pencilled in a marginal fall to 57.3", notes Lloyds Bank.
The ECB will release new staff macroeconomic forecasts which are expected to revise lower its CPI inflation projections through 2017, largely as a result of lower oil price assumptions, reflecting in part the economic slowdown in China.
"As a result, ECB President Draghi's comments at the press conference today are expected to be dovish, emphasising that the Governing Council stands ready to expand the policy stimulus should domestic economic conditions deteriorate. Latest eurozone economic data, however, have remained relatively positive and core inflation has continued to creep higher. As a result, and notwithstanding the expected dovish rhetoric, we believe policy will not be altered at today's meeting", states Lloyds Bank.
