The main event today will be Fed Chairman Janet Yellen's semi-annual testimony before the Senate Banking Committee. Focus will be on any hints regarding the timing of the next hike. We look for a June hike but the risk is still skewed towards an earlier hike. The Fed's Robert Kaplan (voter, dove) yesterday said that 'it is my view that moving sooner rather than later will make it more likely that future removals of accommodation can be done gradually'.
German GDP is due to be released this morning. We look for a stronger-than-consensus rise of 0.7% q/q (consensus 0.5% q/q). It also points to upside risk to consensus of 0.5% q/q for euro area GDP. Strong surveys suggest that euro area growth finished 2016 on a strong note. German ZEW was strong in January but we look for a small decline in February in line with the recent drop in the German ifo expectations index.
In the US, it is time for NFIB small business optimism, which rose sharply last month - most likely due to upbeat expectations about deregulation and tax cuts. We might see a small setback as there are not yet any details on the tax plan. US producer prices are also up today.
To read the entire report Please click on the pdf File Below