The US dollar's recovery gains following the drop in response to the poor jobs data have been pared, except against the yen. There the greenback extended its gains toward JPY120.25, with the help of weak Japanese data, and speculation that the BOJ will revise down inflation forecasts this week, setting the stage for an expansion of QQE later this month.  

Japan reported weaker than expected wage growth and a drop in the services PMI. Total cash earnings for 0.5% in August. The market had anticipated a 0.6% increase after a 0.9% year-over-year pace in July. The main cause was a decline in bonus pay from 1.7% to 0.6%. Regular pay rose 0.5% and overtime 1.5%. Real wages rose 0.2%, slowing from 0.5% in July. The relatively tight labor market condition in Japan is not fueling upward pressure on wages. Separately Japan service PMI fell to 51.4 from 53.7. 

The dollar encounters resistance near JPY120.40, last week high. Support is seen near JPY119.80. The Nikkei gapped higher in response to the US equity market recovery before the weekend. The technical indicators show a bullish divergence by not confirmed the low from last Tuesday. 

Europe's service PMIs were also disappointing, except France. The French service PMI rose to 51.9 from 51.2 in the flash reading and 50.6 in August. The German service PMI slipped to 54.1 from 54.3 flash and 54.9 in August. The service PMI in Italy and Spain slipped more than expected. Italy's eased to 53.3 from 54.6 in August. The market expected 54.1. Spain's fall to 55.1 from 59.6 in August. The consensus was for 58.7. 

The UK service PMI fell to 53.3 from 55.6, a new 2.5 year low. The Bloomberg consensus was for a small improvement. Separately, Sweden was also an exception. Its service PMI rose to 57.0 from 52.4. However, what it is motivating the unorthodox monetary policy by the Riksbank is deflation more than weak growth. The September inflation figures are due October 13. In August, the CPI was -0.2% year-over-year.