The US dollar and the Japanese yen enjoyed significant gains. Is the “safe haven” trade back? The Italian elections, Ben Bernanke’s testimony, durable goods orders, housing and GDP figures and more events promise an interesting week to end a volatile month. Here are the market-movers awaiting us this week.

Last week a surprising FOMC minutes revealed a lively debate over the current ruling of open-ended QE3, opposed by some Fed policy members claiming the US economy is on a steady recovery track and is no longer in need of further monetary stimulus. Analysts await Bernanke’s speech for further elaboration on this major issue. Would the Federal Reserve stop the QE in the coming months? Let’s Start

  1. Italian Parliamentary Election: Sun-Mon The euro-zone’s third largest economy goes to the polls on Sunday and Monday. Results are expected Monday at 15:00. There is a close race between current center-leaning PM Mario Monti, center left leader Pier-Luigi Bersani, center-right PM Silvio Berlusconi and also the alternative candidate Beppe Grillo of the 5 Star Movement. There are fears that Berlusconi will eventually fare very well, and could return to his former job. Another fear is that Italy will have a hung parliament. The best scenario for the markets is a strong outcome for Bersani and Monti, that would form a government together and continue the current policy. Last moment efforts to win over undecided voters compelled former prime minister Silvio Berlusconi to offer easing measures in IMU housing tax as well as remission on penalties for tax evaders. These attempts were strongly criticized by other opponents such as the former Prime Minister Mario Monti, who introduced the IMU tax to battle the debt crisis left behind by Berlusconi’s government.
  2. US CB Consumer Confidence: Tuesday, 15:00. CB Consumer Confidence Index, declined unexpectedly to 58.6 points in January following a revised 66.7 points registered in December. The reading missed predictions of 64.8 points. The increase in the payroll tax lowered confidence regarding the economic outlook. A small rise to 60.8 is forecast.
  3. Ben Bernanke speaks: Tuesday, 15:00. Bernanke will speak at the central bank’s semi-annual monetary policy hearing and provide answers on his aggressive monetary policy actions and on US recovery. Republicans oppose the massive bond purchases saying it only increases deficit. After the relatively hawkish FOMC meeting minutes, Bernanke is likely to remind us that the doves are still in control, and that QE isn’t going away too quickly.
  4. US New Home Sales: Tuesday, 15:00.  Sales of new homes slowed down in December to an adjusted annual rate of 369,000 after registering a record number of 398,000 in November. Sales of new houses increased in the last year due to record-low mortgage rates which thinned the supply of homes in the market causing an increase in construction. Economists believe this is a temporary slowdown. A rise to 381,000 is expected this time.Existing home sales came in line with predictions.
  5. US Durable Goods Orders: Wednesday, 13:00. US Manufacturing sector lifted its durable orders by 1.3% after a 1.2% increase in November, indicating a growth trend. Analysts expected a more moderate rise of 0.8%. Overall, growth in the manufacturing sector looks promising. An increase of 0.4% is forecast.
  6. US Pending Home Sales: Wednesday, 15:00. The number of Americans signing home buying contracts, declined unexpectedly by 4.3%, following a 1.6% gain in the previous month. Sales were down due to short supply of available homes. This trend is expected to continue in the coming months. A gain  of 1.9% is forecasted.
  7. US GDP: Thursday, 13:30. The initial release of US GDP for Q4 2013 was a big disappointment as the economy reportedly contracted by 0.1%, mostly due to a sharp fall in government spending. As the strong growth in Q3 was probably overstated, the first report for Q4 was probably understated. A smaller trade balance deficit and other factors raise the expectations and an upwards revision to 0.5% is now expected.
  8. US Unemployment Claims: Thursday, 13:30. US unemployment claims increased 20,000 last week reaching 362,000 supporting the Federal Reserve position of maintaining its stimulus plan. The reading was above market expectations of 353,000. The unsteady state of the US job market may convince some Fed policymakers that continuing the QE is mandatory. A minor decline to 361,000 is forecast.
  9. Canadian GDP : Friday, 13:30. Canadian GDP growth for November showed an increase of 0.3% following a 0.1% rise in October. The increase was higher than the 0.2% gain predicted by analysts. Production picked up in most industrial sectors. The fourth quarter estimates show an expansion rate of 1.1%, in line with the BOC’ forecast. A contraction of 0.1% is expected this time.
  10. US ISM Manufacturing PMI: Friday, 15:00. Manufacturing PMI increased in January reaching 53.1 from 50.7 registered in December, amid expansion in manufacturing for the second consecutive month.  New orders, production, employment, supplier deliveries and inventories climbed above 50 in January. A small decline to 52.5 is forecast now. This is the first hint toward the Non-Farm Payrolls on March 8th.

That’s it for the major events this week. Stay tuned for coverage on specific currencies

*All times are GMT