ISM Non-manufacturing in the U.S probably shrank in August

The ISM non-manufacturing in the U.S. probably shrank in August for the third straight month, a sign that the economic slowdown is still in full effect as domestic demand and higher costs prevent companies from expanding, economists and traders said before a report today. The Institute for Supply Management's index of non- manufacturing businesses, which make up almost 90 percent of the economy, will probably remain unchanged at 49.5 from a month earlier, according to traders and economists. ``Just like manufacturing, the service sector is slowing, but modestly,'' said Russell Price, a senior economist at H&R Block Financial Advisors Inc. in Detroit. ``It's a combination of just a slowdown in the overall demand environment, as well as a contraction in credit availability.'' The EUR/USD is currently trading at $1.4540 as of 7:32am, GMT.

The Bank of England will probably keep its benchmark interest rate unchanged at 5.00% today as the fastest inflation in more than a decade makes it harder for policy makers to respond to the risk of a recession, a survey of traders and economists showed. Governor Mervyn King's nine-member Monetary Policy Committee will leave its key rate at 5 percent at 12 p.m. in London today. ``The bank would be keen to respond to the weakness in the economy, but it can't,'' said Dominic White, an economist at ABN Amro Holding NV in London. ``The government's measures may provide a small incentive to buy houses now rather than in a few months, but the economy could still feel rather grim. Brown will have to grin and bear it.'' The GBP/USD is currently trading at $1.7832 as of 7:48am, GMT.

ECB President Jean-Claude Trichet and his colleagues will hold the main refinancing rate at 4.25 percent today Traders have pared bets the ECB will raise rates in coming months as reports yesterday showed European retail sales decreased 0.4 percent in July and investment by companies slid 1.2 percent, the first decline in five years.

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