Today's data release Key levels
09:10EU Eurozone retail PMI
14:45US Services PMI & US composite PMI
15:00ISM Non-manufacturing composite
19:00Fed’s Beige Book
Market overview

Traders are taking their final clues before the September 19th-20th policy meeting and three speakers, Brainard, Kashkari and Kaplan, all reiterated their views that the central bank should be cautious about further monetary tightening; Brainard suggesting she was prepared to back the announcement of a reduction of the Fed's $4.5-trillion balance sheet at its September policy meeting, as widely expected. New York Fed president Bill Dudley, another key rate setter, speaks tomorrow. After a disappointing US labour market report on Friday, rate setters have plenty on their minds ahead of their December meeting where, according to CNBC, there is now only a 30% chance of another rate hike.

Also weighing on the dollar is the geopolitical situation which is continuing to develop around North Korea. There are continuing talks regarding sanctions with Washington calling for the “strongest sanctions” ever imposed on a regime. This is despite increasingly heated warnings from the White House that it was actively weighing military options if North Korea threatened the US or its treaty allies in the region.

On the home front, the latest Services PMI edged back to 53.2 from 53.8. The August print was the weakest outturn since September last year although the employment figure is at a 19 month high. The British Retail Consortium also published their monthly figures which were broadly positive. The figures were helped by a weak August in 2016 but even so point to consumer spending continuing to hold up. Brexit has come back to the forefront over the last week with the next round of talks in progress. David Davis has suggested that the UK and the EU could be arguing about the divorce bill right up until leaving. There was also a leak of the government’s draft immigration plan which included proposals to end free movement of workers on the day the UK leaves. It would impose restrictions on workers in a similar to the way workers from outside the EU are currently.

The day ahead

All thoughts are turning towards the ECB meeting tomorrow and whether Mario Draghi will talk about the strength of the euro. However we do have some PMI data out today in the form of the EU Retail PMI and on the US front, Services and Composite PMI. There will also be some focus on the US release of the ISM for the non-manufacturing sector for August at 3pm. Overnight the Fed releases the Beige Book, its anecdotal look at economic conditions across the US.

Thought of the day

Spanish company, Gik, received 30,000 pre orders of their neon-blue chilled sweet white wine! The beverage is made with white and red grapes from vineyards in France and Spain. The special ingredient giving the distinct blue colour is indigo dye with a pigment found on grape skin. The new product has been the determining factor for the company moving into the US market which will have created a new FX exposure, EURUSD. If your business is looking at moving into new markets please give the Investec Dealing Desk on 0800 055 6339.

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