As US investors return today after an extended holiday weekend, there are several high profile economic data releases to keep them engaged. The US ISM non-manufacturing purchasing managers’ index (PMI) and the IBD/TIPP economic optimism index will grab a significant amount of market attention today.

In the Eurozone, a final reading of the second quarter GDP data is on the wires. Meanwhile, German factory orders rose less than expected in July. Across the English Channel, UK retail sales dropped in July. Separately, at the G20 summit that concluded yesterday, world political leaders warned the British Prime Minister, Theresa May, of the potential cost of Brexit to jobs, investment and trade, as they urged her to end uncertainty over the deals sought by the UK.

Pound Sterling – UK Markets

The Pound has extended its previous session gains against the US Dollar and the Euro this morning. Earlier in the session, the BRC-KPMG retail sales monitor indicated that UK retail sales declined in August, as British consumers cut back on spending after a surprise post-Brexit splurge in July. Interestingly, the report attributes this weak data to last month’s hot summer weather which put off shoppers from stepping out onto the streets, and Team Great Britain’s glittering success at the Rio Olympic Games also distracted shoppers from spending. In contrast, food sales recorded its strongest performance in over 2 years, fueled by demand for picnic supplies and celebratory drinks. The rest of the week will see a deluge of economic data points, including reports on industrial and manufacturing production, the NIESR GDP estimate for 3 months ended August, and consumer inflation expectations index.

Yesterday, Sterling climbed to a 1-month high against the greenback, boosted by data showing that activity in Britain’s dominant services sector returned to expansionary territory in August.

US Dollar – US Markets

The US Dollar is trading on a weaker footing against the Euro and the Pound this morning, amid doubts over a Federal Reserve (Fed) interest rate rise this month. These doubts arose after the nation’s labour market showed weaker than expected readings in August. The Fed had earlier hinted that it might raise interest rate before the end of 2016, but at the same time, the central bank also highlighted its concerns about sluggish economic growth in the US, possible repercussions from UK’s vote to leave the European Union and a slowdown in world economic growth. However, the Fed has been indicating that its officials will be closely monitoring the incoming batch of economic data to decide on further tightening in the monetary policy.

Investors will keep a close watch on the US ISM non-manufacturing and the Markit services PMI data, set to release later today, to gauge the strength in the US economy. Additionally, speeches from the Fed officials later this week will be on their radars.

Euro – European Markets

The shared currency is trading mixed against the greenback and the Pound this morning. On the data front, German factory orders bounced back in July, but fell shy of market expectations. The July increase was driven by a rise in foreign demand, primarily from within the Eurozone. Meanwhile, the nation’s construction PMI remained steady in August. Next up for release is the final estimate of the Eurozone’s second quarter GDP which is expected to confirm its preliminary reading.

Yesterday, the Euro ended lower against its major peers after the Eurozone’s service sector activity index declined and the region’s private sector registered its slowest pace of growth in 19 months in August - thanks to a run of poor PMI results from Germany, supposedly the economic powerhouse of the Euro area. However, services and composite indices from elsewhere in the Eurozone beat forecasts. Further, the Eurozone’s retail sales blew past expectations to notch a 1-year high level in July, as a low interest rate environment and rising employment rate provided impetus to overall consumer spending.

Other Currencies – Highlights

The Australian Dollar is trading on a strong footing against the greenback this morning, buoyed by upbeat domestic data and thanks in part to a weaker US dollar, as markets wound back expectations of a US Fed interest rate rise this year following Friday’s disappointing nonfarm payroll numbers. Local data showed that Australia’s current account deficit widened during the second quarter, but came in smaller than investor forecasts. Separately, the Reserve Bank of Australia (RBA) held the official cash rate unchanged at 1.50%, stating that the decision would be consistent with sustainable growth in the economy. The RBA Governor Glenn Stevens, who will pass on the baton to Philip Lowe next month, stated that lower rates are supporting domestic demand and that an appreciating exchange rate could complicate necessary economic adjustments.

In other economic news, inventories in Australia edged up in line with expectations during the second quarter. The recent favourable set of business indicators suggest that Australia’s second quarter GDP numbers, due tomorrow, could be on the upside.