Focus will be on the reactions to yesterday's referendum in which the people of Crimea voted overwhelmingly in favour of joining Russia. The result was expected, as around 60% of the population on Crimea are ethnic Russians. Both the US and the EU have made it clear that they do not recognise the referendum and have warned that an inclusion of Crimea into Russia will be met with sanctions. Information about possible sanctions could come as early as today, as European Foreign Ministers will be meeting on the subject. More harsh trading sanctions could be decided upon at the end of the week by the European heads of state and governments at the EU summit.
On the data front we will get the final euro CPI for February, which we expect to be revised down to 0.7% y/y from 0.8% in the flash estimate. This will put a bit more pressure on the ECB.
In the US the Empire index and industrial production will give more insight into the manufacturing cycle. Manufacturing production took a big hit in January following bad weather and we expect to see only a slight rebound in February. Inventories are high in the US following four months of very weak consumption and this is likely to keep production subdued.
The US NAHB housing index is expected to rebound slightly after last month's big drop. However, keep an eye on the sales expectations, which have also been weak lately. Since the index is forward looking (six months ahead) it should not be affected by the weather.
The rest of the week focus will be on Wednesday's FOMC meeting. We expect the Fed to taper USD10bn but focus will be on projections and Yellen's first press conference following a Fed meeting.
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