Аn overview of the markets this week.

Politics deepened its hold on markets, after French electoral polls boosted the country’s bonds.

Reports of a potential Scottish independence referendum sank the pound.

The dollar was little changed before a key speech from President Donald Trump.

French bonds gained for a fourth day following favorable opinion polls for independent presidential candidate Emmanuel Macron.

Sterling weakened against all its major peers after The Times reported Prime Minister Theresa May’s team is preparing for Scotland to potentially call for an independence referendum in March.

European stocks are falling, tracking a negative day across Asian equities.

With elections this year in France, the Netherlands and Germany against a backdrop of rising populism, and uncertainties around Trump’s policies, investors have been hanging on every word from central bank officials and politicians.

The next focus is will be on the U.S. president’s speech to Congress on Tuesday, which will be parsed for details on spending and tax plans.
“We are concerned that the markets could be heading for a harsh reality check if the Trump administration fails to meet high expectations as reflected in strong equity gains, including risky assets,” Piotr Matys, currency strategist at Rabobank, London.

“It seems to us that the markets are too optimistic, looking from the glass half full perspective and not pricing enough of the negatives.”

What’s ahead for this week:
* In Trump’s address before a joint session of Congress on Feb.
28, the president is expected to lay out his plans for tax and health-care reform and infrastructure spending.
* Investors will also be watching comments from Fed officials, including Yellen, who will speak at an event in Chicago at the end of the week.
* The U.K. government is setting aside time for a Parliamentary battle to overturn changes May fears could be made to her draft Brexit law when it’s debated in the House of Lords this week.
* This week’s economic data include U.S. personal income and spending. India and Australia will report on fourth-quarter GDP.
China’s PMI data ис expected to show continued expansion. Japan reports on factory output, housing starts and capital spending.

Here are the main moves in markets:
Currencies
The British pound lost 0.4 percent to $1.2414

The euro gained 0.2 percent to $1.0586.

The Bloomberg Dollar Spot Index was little changed. The gauge fell 0.4 percent last week, its first drop in three weeks.

Bonds
French 10-year bond yields dropped one basis point to 0.91 percent and peripheral debt also got a boost from improved risk appetite.

German benchmarks added one basis point to 0.19 percent.

Yields on 10-year Treasuries rose one basis point to 2.33 percent, reversing three straight days of declines.

Stocks
The Stoxx Europe 600 Index lost 0.3 percent, extending Friday’s declines.
Deutsche Boerse AG dropped 4.7 percent and London Stock Exchange Group Plc fell 2.7 percent after LSE said the two companies’ merger plan is unlikely to proceed for regulatory reasons.
Intesa Sanpaolo SpA jumped 4.3 percent after abandoning the idea of a merger with Assicurazioni Generali SpA. The Italian insurer slid 3.6 percent.

Commodities

Crude futures rose 0.8 percent to $54.41 a barrel, near the Feb. 23 closing price, which was the highest since July 2015.
Gold weakend 0.2 percent to 1,254.93 an ounce. The metal jumped 1.8 percent last week for its fourth straight weekly advanced.

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