Fed likely to put more weight on the ISM non-manufacturing index (Wednesday)

US ISM non-manufacturing index is scheduled to be released on Wednesday and expectations are for the index to have edged slightly lower to 55.1 from a reading of 55.3 in the previous month.

While the ISM manufacturing index is important for market sentiment, it is also likely to gather Fed attention as it accounts for a larger share of the economy. Apart from ISM non-manufacturing on Wednesday, focus shall also be on the January jobs report due Friday.

"We expect ISM manufacturing has hit the bottom and that the index will rebound slightly in the coming months. However, the index will probably stay weak as the manufacturing sector still suffers from a combination of the very strong USD, the slowdown in manufacturing globally (China) and the lower activity in the US energy sector." notes Danske Bank in a research note to clients.