The new trading week will be full of the information and officials’ speeches. The focus of the markets will be on economic data, the most important of which is the data on the preliminary assessment of February inflation in the euro area, consumption data along with the Fed's inflation estimate, the main CPI deflator and Japanese retail sales along with industrial production.
In addition, the attention of markets will be attracted by the performance of officials, plenty of them this week - speeches by May, Powell's testimony before the Congress, and also the head of the ECB, Draghi will address the European Parliament.
The third group of news items consists of two key political events in Europe: the national elections in Italy and the results of the vote of the German SPD party about their readiness to join the new coalition.
For FOREX currency market last week was pretty quiet. Despite the attempts of the American currency to move to strengthening, the currency markets remained within the current ranges. USD dollar index DX marked last week's highs near the level of 90 points, and not leaving the mid-term range of 88-90 points. Today EUR / USD is trading at 1.2351 at early European session.
Strong dollar and weak Eurozone indicators exerted pressure on the EUR / USD pair over the past week. Nevertheless, the single European currency still looks stable. The new week for the euro starts positively - the price once again moved to growth, while the dollar remains very vulnerable to strong fluctuations.
Now all the attention is focused on the speeches of the new FOMC head, Jerome Powell, who recently replaced Janet Yellen on this post. His first performance will be on Tuesday, the second on Thursday. Volatility in Powell's speech will be high and everything will depend on the position he will take when speaking. Many believe that he will, at least at the beginning of his term, adhere to the policy of Yellen and is now not interested in the collapse of the US stock market, whose volatility has grown in the last week, and is also not interested in strengthening the dollar. There is a suggestion that in his first public appearance he will be very reserved in statements trying to minimize the likelihood of strong volatility.
Besides this week, we expect data on the US labor market, but up to this point it is still necessary to wait for two speeches of Powell mentioned above.
On Friday, global stock markets demonstrated a positive market sentiment and managed to close in the green zone. In the markets, there is a recovery in appetite for risk, amid lower yields on US Treasury bonds. Despite rising inflation expectations, after the launch of the tax reform, the risks of raising interest rates in the US remain moderate, while economic growth in America looks stable. Against this background, we expect a positive start of trading week for equity markets this week.