The CPI will be released on Wednesday and the PPI on Tuesday. In Wednesday, on top of inflation data we will see the output data. In that case investors await another drop (by 0,1% m/m) which lack of belief in a rapid recovery – the US output should be the first to benefit from the weaker dollar. We will get a hint of a likelihood of such scenario after the Philadelphia Fed and the NY Fed activity indices due on Thursday and Tuesday respectively.

The consumer prices reports are due also in the UK and Poland (Tuesday, the consensus for the UK CPI is 2,6% y/y and we expect inflation in Poland to retreat to 4,0% y/y) as well as in the Eurozone (on Wednesday – market awaits a confirmation of the initially estimated 3,5% y/y).

While all the macroeconomic reports are crucial for the longer-term judgments, markets will react also to all the earnings reports from the US located companies, as the 1^st quarter reports start to reveal the impact of the financial crisis on the broader economy. The bad news from Friday are already reflected in sliding stock markets and while the EURUSD is just under the support lines, the yen might be the winner this week.

Przemysław Kwiecień Chief Economist