FXStreet (Bali) - RBS Strategists review the day ahead in the FX market, highlighting the August PMIs both in Europe and China, as well as UK retail sales, as key events.

Key Quotes

"To start, the preliminary estimate of August PMIs in the Euro-zone are due. The July composite is not far from the a multi-year high of 54 in February (current 53.8), but the underlying details should continue to point toward an uneven recovery. Broadly supportive of the ECB's stance of a gradual recovery with downside risks. Inflation prints remain the key data point for ECB expectations. The flash manufacturing PMI in China is released as well for August. The jump in the July PMI to 51.7, best since January 2013, helped buoy sentiment in China's manufacturing sector and improved global growth expectations. Bloomberg consensus looks for a slight dip to 51.5 in August."

"In the UK, retail sales on a monthly basis have been fairly volatile but have retained a solid trend on a medium term view. BRC retail price inflation in July revealed steep discounting at retailers in July which may boost sales in volume terms – the consensus matches our estimate of a +0.4% m/m rise in retail activity."

"Second quarter GDP growth in Norway is released as well. The significantly stronger than anticipated July inflation print sharply reduced the likelihood of further interest rate reductions by Norges Bank. We continue to favour NOK/SEK upside – current inflation robs Norges Bank flexibility to reduce interest rates and/or signal an increased likelihood of future interest rate cuts."

"Other events to watch include RBA FX intervention statistics, though after Governor Stevens' comments overnight about the potential for intervention, it seems clear that the RBA has not begun an intervention program. In the US, initial jobless claims are released and the Philadelphia Fed index is expected to slip moderately after reaching a multi-year high in July. Finally, net migration in New Zealand is seen as a key driver of home price inflation, leaving it a key statistic in the RBNZ inflation and monetary policy outlook."

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