FX and equity markets are expected to be calm next Monday as the US is off and China celebrates Lunar New Year.

The main events of economic calendar on Tuesday are releases of RBA policy meeting minutes and index of economic sentiment in Germany from the ZEW. The report is expected to show a slight deterioration in sentiment due to extension of lockdowns and generally pessimistic stance of the German authorities on the timing of lifting social curbs.

Retail sales in the US, minutes from the ECB and the Fed meetings should help to nail down path of economic recovery and clarify plans of the central banks to maintain loose monetary policy. In line with the speech by Fed Chairman Jeremy Powell this week, who said that it’s not the time to talk about policy normalization, expect a moderately positive impact from the Fed report on risk assets.

On Thursday, the market could be impacted by Eurozone CPI release (expected to rise by 0.9%) and the index of manufacturing activity from the Federal Reserve Bank of Philadelphia, as markets hope that momentum in the manufacturing sectors around the world will continue to be the basis of the recovery.

On Friday, Germany's manufacturing PMI and US existing home sales will also provide insight into the health of the EU and US economies.

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