Worldwide release of the flash September PMI data for the US and eurozone will provide early insights on the health of major economies at the end of the third quarter. A number of central banks will also decide on monetary policy, with markets eagerly awaiting the latest US Fed and Bank of Japan policy meetings.

Other key data highlights include UK retail sales and US housing statistics, while several Asian central banks will also be making policy announcements.

In the US, the Fed meeting is unlikely to see any action but the focus is on any outlining of plans to begin unwinding its $4.5 trillion balance sheet, as well as policymakers' appetite for further tightening of policy. Subdued inflation remains a problem for the Fed, leading to lower expectations of a third rate hike taking place before the end of the year.

Moreover, the economic effects of hurricanes Harvey and Irma are unknown, meaning flash September PMI data will play a crucial role in gauging the post-hurricane impact as we approach the end of the third quarter, and thereby provide further clues as to the direction of future Fed policy. The pre-Harvey/Irma survey data (August) were pointing to GDP rising at an annualised rate of 3.5% in the third quarter, but growth could struggle to rise much above 2%.

US GDP and economic growth

Meanwhile, the euro's strength has held back ECB hawks, with president Mario Draghi saying that inflation could slow because of a stronger exchange rate. He added that plans to reduce its asset purchase programme are likely to be decided next month " thus increasing the focus on the release of the flash PMI data for September, which could show whether the recent trend of strong growth and rising inflationary pressures has remained intact.

The ZEW and European Commission surveys of economic sentiment will also be watched for clues to the health of the eurozone economy.

In the UK, retail sales and an updated Household Finance Index survey will provide fresh insights on consumption trends. The recent rise in employment numbers should provide some support to consumer spending, with the jobless rate falling to its lowest since 1975. However, wage growth remains stubbornly low despite the hiring surge, which could continue to weigh on household spending.

In Japan, the Bank of Japan decides on monetary policy, but no changes are expected. Low inflation remains a key issue for the central bank despite stronger economic growth and a tighter labour market. PMI data indicated that higher costs only show a modest feeding-through to higher selling prices, which in turn points to subdued inflationary pressures. Analysts generally expect the BOJ to lower its inflation forecast at the October meeting.

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