Dollar Drifts Lower Ahead of Data

At 4:00 AM Eurozone August Services PMI (exp 57.9, prev 58.3)
At 4:30 AM UK August CIPS Services PMI (exp 56.5, prev 57.0)
At 5:00 AM Eurozone July Retail Sales m/m (exp 0.3%, prev 0.4%)
At 8:15 AM US August ADP Private Sector Payrolls (exp 83k, prev 48k)
At 9:00 AM Bank of Canada Policy Decision (exp 4.5%, prev 4.5%)
At 10:00 AM US July Pending Home Sales (exp -2.0%, prev 5.0%)

The dollar continues to trade on weak footing against the euro and sterling, drifting to 1.3620 and 2.0150, respectively. Traders will focus on central bank policy decisions and US economic data in the coming sessions, with a bias toward a weaker dollar. Although all of the central banks meeting this week are expected to leave policy unchanged, the key highlights will be the subsequent comments for clues on the timing of any potential changes in interest rates.

In the coming session, US reports slated for release include August ADP private sector payrolls, often viewed as a proxy to the US non-farm payrolls, and July pending home sales. The ADP private sector payrolls are seen posting a strong jump from the previous month, surging to 83k from 48k. Meanwhile, the housing market's struggles continue with July pending home sales seen down 2.0% compared with a 5.0% increase from June.

The Bank of Canada will announce its policy deliberations at 9:00 am and is not seen changing interest rates, standing pat at 4.5%. Earlier in the session, the Reserve Bank of Australia left rates unchanged at 6.5%. Given the recent market turmoil and volatility, many central banks have shifted away from their tightening stances until the global financial outlook becomes clearer. Later on in the week, both the Bank of England and European Central Bank will announce their decision. The ECB, which was initially anticipated to hike this month prior to the volatility in August, will keep policy unchanged and shift the focus to President Trichet's press conference.

Eurozone economic reports due out later include August services PMI and July retail sales. The services PMI is expected to drift to 57.9 for August, down slightly from 58.3 a month earlier. Retail sales are largely unchanged, marginally lower to 0.3% versus 0.4%.

EURUSD continues to trade near its highs, hovering around 1.3624. Resistance is seen at 1.3680, followed by 1.37 and 1.3750. Subsequent ceilings are seen at 1.38, backed by 1.3850 and 1.39. Support begins at 1.3620, followed by 1.36 and 1.3550. Subsequent floors are eyed at 1.3520, backed by 1.35 and 1.3460