Investing.com - Global financial markets will focus on Federal Reserve Chair Jerome Powell in the week ahead, as he makes his first major appearance as central bank chief when he testifies on the economy before congressional committees.
Staying in the U.S., a report on personal income and spending, which includes the personal consumption expenditures inflation data, the Fed's preferred metric for inflation, will be the highlight of the week.
In Europe, investors will await monthly inflation data to assess how fast the European Central Bank will start unwinding its asset purchase program.
Meanwhile, traders will focus on a pair of reports on activity in the UK manufacturing and construction sectors for further hints on the health of the economy and the likelihood of the Bank of England raising interest rates this year.
Elsewhere, market participants will be looking ahead to monthly data on China's manufacturing sector amid recent signs that momentum in the world's second largest economy remains strong.
Ahead of the coming week, Investing.com has compiled a list of the five biggest events on the economic calendar that are most likely to affect the markets.
1. Fed Chair Powell Testifies
Federal Reserve Chair Jerome Powell is set to deliver his first semi-annual monetary policy testimony on the economy before Senate and House committees in Washington DC.
Powell is scheduled to testify on the economy before the Senate Banking Committee at 10:00AM ET (1500GMT) Tuesday. On Thursday, he will appear in front the House Financial Services Committee also at 10AM ET.
Text of the testimony will be released 90 minutes before he starts speaking.
Powell's comments will be monitored closely for any new insight on his views on the recent uptick in inflation and how that can affect the current rate-hiking path. Investors will also be watching for comments on the markets themselves, in light of the latest bout of increased volatility.
The latest minutes from the Federal Open Market Committee's policy discussions published last week drove speculation the U.S. central bank will raise interest rates at a faster pace than currently expected.
Indeed, many economists have started to forecast four rate hikes this year, more than the three the Fed currently predicts, due to a recent batch of stronger-than-expected U.S. inflation data.
The Fed is scheduled to hold its next policy meeting on March. 20-21, with interest rate futures pricing in an 80% chance of a rate hike at that meeting, according to Investing.com's Fed Rate Monitor Tool.
2. U.S. PCE Inflation Data
The Commerce Department will publish data personal income and consumer spending for January, which include the personal consumption expenditures (PCE) inflation data, the Fed's preferred metric for inflation, at 8:30AM ET (1330GMT) Thursday.
The consensus forecast is that the report will show that the core PCE price index inched up 0.3% last month, after rising 0.2% a month earlier. On an annualized basis, core PCE prices are expected to rise 1.5%, unchanged from the preceding month.
The Federal Reserve uses core PCE as a tool to help determine whether to raise or lower interest rates, with the aim of keeping inflation at a rate of 2% or below.
This week's calendar also features the second estimate of GDP growth for the fourth quarter on Wednesday, expected to show a small downward revision from 2.6% to 2.5%.
Reports on ISM manufacturing sector growth, CB consumer confidence, durable goods orders, new home sales, pending home sales and monthly auto sales will also be on the agenda.
Meanwhile, on Wall Street, earnings in the week ahead include results from chain-store retailers such as Macy's (NYSE:M), Nordstrom (NYSE:JWN), Kohl’s (NYSE:KSS) and JC Penney (NYSE:JCP), in what will be the last big wave of the fourth-quarter earnings season.
Elsewhere, news out of Washington D.C. is expected to keep investors on their toes, as the investigation into President Donald Trump campaign's ties to Russia continues to rumble on.
3. Euro Zone Flash Inflation
The euro zone will publish flash inflation figures for February at 1000GMT (5:00AM ET) Wednesday, which if they remain strong could push the European Central Bank another step closer to ending its mass stimulus program.
The consensus forecast is that the report will show consumer prices rose 1.2%, slowing slightly from 1.3% in January, remaining short of the European Central Bank's target of just below 2%.
Perhaps more significantly, the core figure, without volatile energy and food prices, is seen holding steady at 1.0%, unchanged from a month earlier.
Germany, France, Italy and Spain will produce their own CPI reports throughout the week.
Besides the inflation data, ECB President Mario Draghi will testify on monetary policy and the inflation outlook before the European Parliament Economic and Monetary Affairs Committee, in Brussels at 1400GMT (9:00AM ET) Monday.
How he views signs of rising inflation and any clues on how fast the central bank will begin exiting its massive quantitative easing program will be important.
Minutes of the ECB's last meeting released last week revealed that ECB officials rejected even a token change in the bank's policy message, arguing that it was premature to signal policy normalization given weak inflation.
Despite those remarks, market players remain convinced that easy monetary policy in the region is coming to an end sooner rather than later.
The central bank cut its monthly bond purchases from €60 billion to €30 billion back in October, but extended the program until the end of September 2018, citing muted price pressures.
The ECB next meets on March 8.
4. UK PMI's
The U.K. will release readings on February manufacturing sector activity at 0930GMT (4:30AM ET) on Thursday, followed by a report on the construction sector on Friday.
Additionally, a speech on Friday by British Prime Minister Theresa May about Britain's post-Brexit relationship with the European Union will also be on the agenda, as Brexit developments remain in focus.
While Britain's economy is lagging behind the global recovery, it has held up better than the gloomy forecasts made at the time of the 2016 vote to leave the European Union.
The Bank of England kept interest rates steady earlier this month, but signaled it was likely to raise rates sooner and by more than it thought a few months ago as it seeks to keep a grip on inflation.
5. Chinese Manufacturing PMI
The China Federation of Logistics and Purchasing is to release data on February manufacturing sector activity at 0100GMT on Wednesday, amid expectations for a modest uptick to 51.4 from a reading of 51.3 in January.
The Caixin manufacturing index, which focuses more on small and mid-sized firms, is due at 0145GMT Thursday. The survey is expected to dip by 0.2 points to 51.3 from 51.5.
The purchasing managers' index (PMI) is seen as a good indicator of economic conditions and it is even preferred by some analysts to gross domestic product, which might be affected by poor seasonal adjustment and is prone to revisions.
Anything above 50.0 signals expansion, while readings below 50.0 indicate industry contraction.
China's economy grew 6.8% in the fourth-quarter from a year earlier, helped by a rebound in the industrial sector, a resilient property market and strong export growth.
Stay up-to-date on all of this week's economic events by visiting: http://www.investing.com/economic-calendar/
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