ECB to extend QE programme

Markets are trying to survey the extent of weakness in emerging markets, in particular China, and the spillover to developed markets. Data released this week could give the first indications.

Chinese export figures for August will give a signal of demand weakness in emerging market Asia. August credit growth data will indicate if monetary easing is finally providing a more positive credit impulse to the economy.

Euro area Sentix investor confidence will indicate the damage to sentiment from emerging markets turmoil. Lower gasoline prices are set to counter the shock to consumer sentiment from falling stock markets and we look for a broadly unchanged US University of Michigan survey. 

Oil and clothing are a drag on inflation in Sweden and Denmark. A weak NOK should boost Norwegian inflation later this year but the impact is limited for now.

"We expect no new announcements at the policy meeting at the Bank of England but the minutes are likely to show concern about the near-term inflation outlook", says Danske Bank.