The important economic news that will drive the markets this week

Global financial markets will focus on this week's U.S. inflation data to gauge how it will impact the Federal Reserve's view on monetary policy in the months ahead.

Staying in the U.S., there is also retail sales data for February. The reports should provide further clues about the strength of the economy ahead of the Fed's March 20-21 meeting.

Meanwhile, in Europe, investors will await monthly inflation data to assess how fast the European Central Bank will end its massive economic stimulus program in the wake of last week's ECB meeting.

A monetary policy announcement from the Swiss National Bank will also be in focus, though it’s highly unlikely it will rock the boat policy-wise.

U.S. Inflation Data

The Commerce Department will publish February inflation figures at 8:30AM ET (1230GMT) Tuesday.

Market analysts expect consumer prices to rise 0.2%, weakening from January's 0.5% increase, while core inflation is forecast to inch up 0.2%, a touch slower than a month earlier, when core CPI recorded a 0.3% gain.

On a yearly base, core CPI is projected to climb 1.8%, unchanged from the preceding month. Core prices are viewed by the Federal Reserve as a better gauge of longer-term inflationary pressure because they exclude the volatile food and energy categories. The central bank usually tries to aim for 2% core inflation or less.

Rising inflation would be a catalyst to push the Fed toward raising interest rates at a faster pace than currently expected.

U.S. Retail Sales

The Commerce Department will publish data on retail sales for February at 8:30AM ET (12:30GMT) Wednesday.

The consensus forecast is that the report will show retail sales rose 0.3% last month, snapping back after a decline of 0.3% in January.

Core sales are forecast to inch up 0.3%, after holding flat a month earlier.

Rising retail sales over time correlate with stronger economic growth, while weaker sales signal a declining economy. Consumer spending accounts for as much as 70% of U.S. economic growth.

Euro Zone CPI

The euro zone will publish final inflation figures for February at 1000GMT (6:00AM ET) Friday. The report is expected to confirm that consumer prices rose 1.2%, 0.1% slower than in the previous month.

Perhaps more significantly, the core figure, without volatile energy and food prices, is seen holding steady at 1.0%, unchanged from a month earlier.

Final inflation figures for Germany, France, Spain and Italy are also due this week.

The European Central Bank dropped a long-standing pledge at its meeting last week to increase its bond-buying if needed, taking another small step in weaning the euro zone economy off its protracted stimulus.

SNB Policy Assessment

The Swiss National Bank's quarterly monetary policy assessment is due on Thursday at 0830GMT (4:30AM ET). Most economists forecast the central bank’s benchmark interest rate to remain unchanged at -0.75%.

The SNB is also expected to stick to its commitment to foreign currency interventions if necessary.

SNB Chairman Thomas Jordan is slated to repeat that the Swiss franc remains “highly valued”, despite a brighter economic outlook and recent weakening of the currency.

Most analysts see the SNB staying on hold until the European Central Bank makes its own move to raise interest rates.

Source: Bloomberg Pro Terminal

Jr Trader Alexander Kumanov

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