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Top 5 Things to Watch in Markets in the Week Ahead -Breaking


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Noreen Burke — Monday’s market opening will be triggered by a decision made Saturday by Western countries to stop some Russian banks being connected to the SWIFT international payment network. This was in response to the invasion of Ukraine. Investors may be able to see the impact of the rising cost of energy and the conflict in Ukraine on the Federal Reserve Chair Jerome Powell’s testimony. Datawise, Friday’s U.S. employment report for February is expected to show the recovery in the labor market remains solid. Inflation data from the Eurozone for February will reach a record-breaking high. This is due to rising commodity prices. Here’s what you need to know to start your week.

  1. Russia SWIFT ban

On Saturday, Western allies announced new severe sanctions for Moscow. This includes the international payment system. In the days ahead, this decision will become effective.

While the allies have also promised curbs to Russia’s central bank in order to restrict its ability to support it, the Allies are yet to specify which banks will be hit. A diplomat for the European Union said that 70% of Russian banking markets would be affected.

Investors are worried about Russian banks being blocked from SWIFT because this could disrupt international trade, hurt Western interests and hit Russia.

Investors believe that the Russian ruble will suffer. Russia’s currency fell to an all-time low against the U.S. dollar in the past week, though it pared some of those losses on Friday.

“With the central bank likely to face severe constraints on currency intervention, the ruble will struggle to find a bottom,” Karl Schamotta, chief market strategist at Corpay told Reuters. “No one wants to catch a falling knife.”

  1. Powell testimony

As sanctions against Russia escalate and market volatility continues to remain at high levels, Fed Chair Jerome Powell’s testimony this week on the economy will be needed to assure investors that the Fed will continue to take action to combat rising inflation in an uncertain economic environment.

Powell will testify in front of the House Committee on Financial Services on Wednesday and the House Committee on Financial Services on Thursday.

Fed officials indicated they are ready to lift interest rates at their upcoming meeting, in an effort to reduce inflation which has reached a record 40-year high. Fed officials now have to weigh the economic and geopolitical consequences of the conflict in Ukraine with the possibility that they will attempt aggressively to reduce inflation.

Russia’s invasion of Ukraine will fuel a sharper increase in the cost of living by driving up energy prices, while the extra squeeze on household spending is likely to act as a drag on the economic recovery, which has already been hit by the Omicron wave.

  1. Payrolls for nonfarm workers

Economists expect Friday’s nonfarm payrolls report for February to show that the economy added jobs with the unemployment rate expected to tick down to and average hourly earnings forecast to rise at a annual rate.

Payrolls processor ADP will release data on Wednesday, while the Labor Department will publish the weekly report Thursday.

Also included in the economic calendar are surveys of February’s and by the Institute of Supply Management. These sectors have likely rebounded after the Omicron wave had less impact on business activity.

  1. Price of commodities

Russia’s invasion of Ukraine sent oil prices above $100 a barrel for the first time since 2014 on Thursday with touching $105, before paring gains. Concerns about supply security have caused European gas prices to rise.

Russia is Europe’s 2nd largest crude-oil producer.

To see whether the sanctions will affect oil and natural gas flows, energy traders will wait for details from SWIFT about the actions to ban Russian banks. But the measures are likely to discourage buyers from buying Russian oil.

Ministers of the Organization of the Petroleum Exporting Countries and their allies, led by Russia (a group known as OPEC+), will meet Wednesday to discuss whether or not to raise April’s output by 400,000 bpd.

  1. Eurozone CPI

The Eurozone will publish data about consumer price inflation Wednesday. This is likely to set a new high record.

Inflation data will be a headache for the European Central Bank before its March key meeting. At its March meeting, the ECB will make a thorough assessment of economic prospects following Russia’s invasion of Ukraine.

Several ECB officials, including President Christine , Vice President Luis , Chief Economist Philip , and Bundesbank President Joachim Nagel are due to speak ahead of the start of the traditional blackout period, which begins on Thursday with the publication of the of the bank’s most recent meeting.

This report was contributed by Reuters