Russia's invasion of neighbouring Ukraine has introduced a new element of uncertainty to global markets this week. Russia's President Vladimir Putin's decision to send troops into Ukraine's Crimea region has policymakers in the US and Europe scrambling to craft an effective response.
According to the Globe and Mail website on Sunday, "The crisis in Ukraine is raising the anxiety level among global investors, with the threat of outright military conflict adding to broader concerns that have roiled emerging markets in recent months."
As markets weigh the implications of this weekend's events, they will be on the lookout for policy announcements from the European Central Bank (ECB) and others and a series of key data releases – including America's monthly payrolls report – scheduled for the coming days. Here is your guide to the week ahead.
Africa
Policymakers at three African central banks will gather to consider interest rates this week. Kenya and Uganda will announce their decisions on Tuesday followed by Mauritius on Friday.
Kenya's year-on-year consumer inflation rate slowed to 6.86% in February from 7.21% in January and the Kenyan shilling – unlike many other emerging market currencies – has performed well over the past few months. As a result, the Central Bank of Kenya is likely to leave the country's benchmark rate on hold at 8.5% this week.
Uganda's policymakers have their work cut out for them as they consider their country's near-term economic outlook. A severe global backlash against an anti-gay law signed into law last week saw the local currency erase three months of gains in three days, despite central bank dollar sales on both Wednesday and Thursday. Denmark, Norway and the Netherlands have cut aid to the East African economy and the World Bank has suspended a $90-million loan due to the Bill's signing. More punitive action may follow from other countries and multilateral institutions, potentially bringing dire economic consequences.
In Mauritius, inflation spiked to its highest level in over two-years in January, bringing the country's inflation rate above the central bank's benchmark rate for the first time since the end of 2011. Although real lending rates are still positive, real interest rates near negative territory will be a cause for great concern among policymakers. Inflation may reach 5% in March if excess liquidity in the country's banking system is not addressed. As a result, a rates rise is likely.
Beyond these three bank meetings, Africa's economic calendar is fairly light this week. Highlights include South Africa's latest manufacturing purchasing managers' index (PMI) readings and Nigeria's third quarter trade data, Mauritius' and Tanzania's February consumer price inflation reports and Egypt's and South Africa's latest reserve figures.
United States
America has endured an unusually cold and snow-filled winter. As a result, disappointing economic indicators released over the past few weeks – everything from weak labour market performance to lacklustre industrial output reports – have been largely shrugged off as skewed, weather-induced anomalies. Apologists may explain this week's data similarly.
The big item on the calendar is Friday's monthly employment situation report. Consensus is that the release will show that employers added 148 000 positions last month. If the consensus proves accurate, this week's release will likely bolster the argument that the world's largest economy is pulling out of its harsh winter induced funk. A disappointing print could lead to questions over potential backsliding, but could also just set off a new round of debate on the weather effect.
Markets will get a preview of Friday's big release on Wednesday, when ADP releases its own national employment report. Based on records representing 400 000 US businesses and approximately 23-million employees, ADP's report is widely viewed as a sort of predictor of government statistics. Consensus is that ADP's report will show that employers added 150 000 jobs in February. A weaker than expected result would dampen expectations for Friday's official tallies.
Beyond these two reports, economists and investors will be on the lookout for a number of other reports over the coming days. February's motor vehicle sales figures and the Institute for Supply Management's manufacturing index, along with January's personal incomes and outlays (spending) and construction spending reports, will be released on Monday. January's factory orders and international trade numbers will follow on Thursday and Friday, respectively.
Europe
Monday morning will bring February's final manufacturing PMI releases covering Germany, France and the eurozone as a whole. All three forward-looking gauges of economic activity are expected to remain unchanged from preliminary estimates.
The eurozone's PMI is expected to hold steady at 53, comfortably above the 50-mark separating expansion from contraction. As is Germany's index at 54.7. France is expected to signal continued contraction at a reading of 48.5.
Monday afternoon will be busy in Brussels. European Union economics commissioner Olli Rehn will hold a press conference to release the EU executive's report on Europe's macroeconomic imbalances. EU foreign ministers will gather for an emergency meeting to discuss the situation in Ukraine. And European Central Bank (ECB) chief Mario Draghi will testify before the European Parliament.
Draghi will return to centre stage on Thursday to announce the ECB's latest policy decisions. The ECB is grappling with a fragile economic recovery, stubbornly high employment, worryingly low inflation and a banking system that is reluctant to lend money. Given slightly better than expected inflation and growth data released last month, most economists believe policymakers will leave the bank's rate target unchanged at 0.25% this week.
Analysts will also be on the lookout for the ECB staff's updated economic outlook on Thursday. Markets will be paying particularly close attention to the bank's medium-term inflation outlook.
The Bank of England will also announce its interest rates decision on Thursday. No change is expected now or anytime soon.
Asia
China's National People's Congress (NPC) – the country's Parliament – will kick-off its annual meeting on Wednesday. Around 3 000 delegates will gather in Beijing's Great Hall of the People to ratify policy decisions made by China's ruling Communist Party. The session is scheduled to run for roughly nine days.
Premier Li Keqiang is expected to announce the government's principal economic targets on the NPC's first day. Economists widely anticipate China's growth target to remain unchanged at 7.5% for 2014. Inflation is likely to be targeted at around 3.5%.
Officials do not release an agenda for the meeting to the public, but analysts expect that other items on the docket include a number of previously floated economic reforms, including replacing the country's business tax with a VAT and programmes to liberalise the country's currency and interest rate regimes.
China currently allows its local currency – the yuan – to trade within a narrow band. Some analysts believe that officials may announce plans to widen this trading range during or following this year's session. Markets are also awaiting details of a long-planned deposit insurance system.
Economists and investors will also be on the lookout for proposals aimed at combating corruption, fighting pollution, restructuring government ministries and scaling-back the size of state-owned enterprises.
Finally, plans aimed at reining in China's massive local government debt will be particularly scrutinised. According to the National Audit Office's latest figures, local government debt climbed to 17.9-trillion renminbi in mid-2013 from 10.7-trillion at the end of 2010.