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 With a Chinese slowdown blamed for spooking the Fed last week into
postponing a rate hike, China's flash manufacturing purchasing
managers' index on Wednesday will be closely watched for signs of
deterioration in the world's second-biggest economy.
Economists polled by Reuters are banking on a slight improvement and
any disappointment risks reigniting concerns that the Chinese
economy is slowing faster than thought.
"We would caution against pinning hopes on more than a slight
stabilization at weak levels, given continued weak industrial
conditions and especially as the effect of recent factory closures
will not have completely washed out," said economists at brokerage
Exane BNP Paribas.
In the United States, economic data is likely to take a back seat
next week.
"Of more significance will be Fed speeches, which may be used to
nudge rate hike expectations following the markets' seemingly dovish
interpretation of the press release and conference message," ING
economist James Knightley said in a research note.
"We still feel there is a strong case for expecting an October
hike," he added.
YELLEN, XI
Most Wall Street banks polled by Reuters shortly after the decision
was made public expect that the Fed will not act that soon, and will
instead begin hiking rates only at its meeting in December.
No longer muzzled by the pre-meeting blackout, Fed officials will be
out in droves to air their views, with the highlight a speech by Fed
Chair Janet Yellen in Massachusetts on Thursday.
But intense attention will fall on Chinese President Xi Jinping's
meeting on Friday with U.S. President Barack Obama, with no shortage
of economic issues to chew over.
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Looking to the euro zone, economists see flash PMI data due on
Wednesday coming in slightly stable to soft in September.
However, expectations for Germany's PMI and IFO business confidence
are on the downside, despite a weaker euro benefiting its exports as
Chinese demand eases.
Money supply data from the European Central Bank will indicate
whether the flow of credit to households and businesses continued
its ever so gradual recovery in August.
Credit growth is seen as one of the main gauges of whether the ECB's
unprecedented program to buy 60 billion euros ($68 billion) of bonds
and other assets a month is succeeding in reviving the economy and
beating back the threat of deflation.
Though Europe's refugee crisis has largely eclipsed Greece's debt
troubles in recent weeks, markets will have to quickly figure out
what to make of weekend election results.
With protracted coalition negotiations a likely immediate outcome,
whoever emerges on top will have to push ahead with economic reforms
to ensure that Greece remains in the euro zone.
(Reporting by Leigh Thomas; Editing by Kevin Liffey)
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