It's been a slow start to trading on Monday, with a lack of major news flow or data providing few catalysts, but unlike last week that is unlikely to continue with numerous events scheduled that could shake things up.

The feeling at the start of the week is predominantly of relief. Donald Trump met with Shinzo Abe over the weekend which, given his tone towards Japan during his election campaign, could have been a tasty affair but as we saw following a phone call with Xi Jinping on Friday, the meeting appeared to go very smoothly. Of course we know very little about what was said behind the scenes but there is a sense of relief that the joint statement focused on "bilateral cooperation", which appeared to be a welcome step down from Trump's previous stance.

This sense of relief is helping drive equity markets higher in Europe and US futures suggest we'll see similar moves on Wall Street when the bell gets the week underway. The noises coming from the White House over the last week have certainly been more market friendly, with Trump also signalling that sweeping tax cuts that were promised during the campaign will be announced in the next few weeks. Other policies will continue to leave a cloud of uncertainty over markets for now but with all three major indices at record highs, it's clear that investors are pleased with how things are progressing, so far.

Oil has recovered some of its losses after OPEC released its monthly report which largely confirmed the report from IEA on Friday which claimed that compliance with cuts within the cartel was above 90% in January. In fact, OPEC claimed 93% compliance from the 11 members which have agreed to take part, with Saudi Arabia actually cutting more than it agreed taking its output to 9.748 million barrels per day. The report also slightly revised higher its demand growth forecasts and claimed the oil market will see zero average surplus this year, from 985,000 barrels per day last month.

While this level of compliance is unusually strong, many still believe the agreement to cut 1.8 million barrels per day until June will still not be enough to bring the market back into balance. An extension to the cuts has been touted by some including Russian energy minister Alexander Novak, who claimed the decision on whether to extend could be made at a meeting with Saudi Arabia in April or May.

USD/CAD is showing little movement in the Monday session. Currently, the pair is trading at the 1.31 line. Investors will be starting the week looking for economic cues, as there are no Canadian or US releases on the schedule. On Tuesday, The US releases PPI and Janet Yellen will testify before Congress.

US crude stockpiles continue to record surpluses. On Wednesday, Crude Oil Inventories made a splash, soaring 13.8 million barrels, according to the Energy Information Administration (EIA). The indicator has recorded five straight surpluses, easily exceeding forecasts on each occasion. The huge gain also marked the highest surplus since late October. Crude posted sharp losses on Tuesday, following the release of the API inventories report, which predicted a surplus of 14.2 million, compared to a forecast of 2.38 million. The EIA says that US production in 2017 will be the highest since 1970, so cuts from OPEC and Russia may not lead to higher oil prices, due to the steady increase in US crude production. The Canadian dollar is sensitive to crude fluctuations, so stronger oil prices would likely boost the Canadian dollar.

Donald Trump continues to entangle himself in controversy, with US allies, the media and the Supreme Court. On Thursday, Trump said that the administration was working on a "phenomenal" tax plan, which would be released in a few weeks, although he gave no details. Trump's plan is expected to lower taxes for both corporations and individuals, although tax reform promises to be a slow and daunting task, as changes to the US tax code can only be made by Congress. Still, the markets are hungry for any movement in this direction, and the dollar could get a strong boost once Trump outlines his tax agenda.

EUR/USD is almost unchanged on Monday, as the pair trades at 1.0630. It's a very quiet day on the release front. German inflation improved, as WPI came in at 0.8%, above the forecast of 0.3%. There are no US events on the schedule. On Tuesday, Germany releases GDP and consumer confidence numbers, while the Eurozone also releases GDP. The US will release PPI and Janet Yellen will testify before Congress.

The eurozone economy continues to improve. Growth has been steady and inflation, which has languished at low levels for years, is higher. However, there are black clouds on the horizon. There is increasing uneasiness in the markets as populist, far-right parties are gaining support in France, the Netherlands and Germany, threatening the old order. First up is France – the country goes to the polls in April, and Marie Le Pen, the far-right candidate in the ring, is leading in the polls ahead of the first round of voting. Le Pen wants to take France out of the Eurozone and has promised a referendum on France's membership out of the European Union. Although Le Pen is not expected to win the presidency, neither was Donald Trump. Le Pen has enthusiastically endorsed Trump's anti-establishment message and if she does well in the polls, the euro could be headed to lower levels.

Across the Channel, British Prime Minister Theresa May is preparing to invoke Article 50 and commence negotiations with the EU over Brtain's departure by the end of March. May has said that a deal could be reached in two years, but on Thursday, the head of the European Commission in Britain, Jacqueline Minor, countered that the timeline was unrealistic, suggesting that an "implementational" phase would be needed. The European Union doesn't want to encourage other members to exit, so it has no reason to go out of its way to accommodate Britain, and Minor has warned that the Brexit negotiations could get "nasty".

Donald Trump continues to entangle himself in controversy, with US allies, the media and the Supreme Court. On Thursday, Trump said that the administration was working on a "phenomenal" tax plan, which would be released in a few weeks, although he gave no details. Trump's plan is expected to lower taxes for both corporations and individuals, although tax reform promises to be a slow and daunting task, as changes to the US tax code can only be made by Congress. Still, the markets are hungry for any movement in this direction, and the dollar could get a strong boost once Trump outlines his tax agenda.

Daily Pivots: (S1) 112.72; (P) 113.28; (R1) 113.73; More...

Intraday bias in USD/JPY remains on the upside for the moment. Correction from 118.65 should have completed at 111.58, on bullish convergence condition in 4 hour MACD. Further rally would be seen to 115.36 resistance. Break will confirm this bullish case and target 118.65 high next. In that case, the larger rally from 98.97 could be resuming. On the downside, below 112.85 minor support will dampen this bullish view and could extend the correction from 118.65. In that case, downside should be contained by 38.2% retracement of 98.97 to 118.65 at 111.13 and bring rebound.

In the bigger picture, price actions from 125.85 high are seen as a corrective pattern. The impulsive structure of the rise from 98.97 suggests that the correction is completed and larger up trend is resuming. Decisive break of 125.85 will confirm and target 61.8% projection of 75.56 to 125.85 from 98.97 at 130.04 and then 135.20 long term resistance. Rejection from 125.85 and below will extend the consolidation with another falling leg before up trend resumption.

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Daily Pivots: (S1) 0.9997; (P) 1.0029; (R1) 1.0054; More.....

Intraday bias in USD/CHF remains on the upside for the moment. As noted before, a short term bottom is formed at 0.9860 on bullish convergence condition in 4 hour MACD. Sustained trading above 55 day EMA (now at 1.0038) will pave the way for a test on 1.0342 high. On the downside, below 0.9935 minor support will turn focus back to 0.9860 instead.

In the bigger picture, prior rejection from 1.0327 resistance argues that USD/CHF is staying in a medium term sideway pattern. In any case, decisive break of 1.0342 resistance is needed to confirm underlying strength. Otherwise, we'll stay neutral in the pair first. In case of another fall, we'd expect strong support from 0.9443/9548 support zone. Meanwhile firm break of 1.0342 will target 38.2% retracement of 1.8305 to 0.7065 at 1.1359.

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Daily Pivots: (S1) 1.0608; (P) 1.0638 (R1) 1.0668; More.....

EUR/USD recovers mildly after dipping to 1.0670. But intraday bias stays on the downside with 1.0713 minor resistance intact. Corrective rise from 1.0339 should have completed at 1.0838 already. Deeper decline should now be seen to retest 1.0339 low. Decisive break there will confirm resumption of medium term down trend. On the upside, however, above 1.0713 minor resistance will delay the bearish case and turn bias neutral first.

In the bigger picture, whole down trend from 1.6039 (2008 high) is in progress. Such down trend is expected to extend to 61.8% projection of 1.3993 to 1.0461 from 1.1298 at 0.9115. On the upside, break of 1.1298 resistance is needed to confirm medium term bottoming. Otherwise, outlook will stay bearish in case of rebound.

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Daily Pivots: (S1) 1.2442; (P) 1.2481; (R1) 1.2523; More...

Intraday bias in GBP/USD remains neutral for the moment. Overall outlook remains unchanged. Price actions from 1.1946 are viewed as a consolidation pattern, with rise from 1.1986 as the third leg. In case of another rise, we'd expect upside to be limited by 1.2774 to bring larger down trend resumption. On the downside, below 1.2346 will revive the case that such consolidation is completed at 1.2705 already. In that case, intraday bias will turn back to the downside for retesting 1.1946 low.

In the bigger picture, fall from 1.7190 is seen as part of the down trend from 2.1161. There is no sign of medium term bottoming yet. Sustained trading below 61.8% projection of 2.1161 to 1.3503 from 1.7190 at 1.2457 will target 100% projection at 0.9532. Overall, break of 1.3444 resistance is needed to confirm medium term bottoming. Otherwise, outlook will remain bearish.

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Euro recovered broadly today as EU raised both growth and inflation forecast. Meanwhile, the Japanese Yen stays the weakest one on solid risk appetite. EU raised growth forecast for both EU and Eurozone in its Winter forecast released today. For EU growth is projected to be 1.8% in 2017 and 2018, up from November estimate of 1.6% and 1.8%. For Eurozone, growth is projected to be 1.6% in 2017 and 1.8% in 2018, up from November estimate of 1.5% and 1.7%. Inflation is also expected to pick up. For EU, inflation is projected to rise for 0.3% in 2016 to 1.8% in 2017 drop back to 1.7% in 2018. For Eurozone, inflation is expected to rise from 0.2% in 2016 to 1.7% in 2017 and drop back to 1.4% in 2018.

For UK, EU expected growth to "moderate in 2017 and weaken further in 2018. UK growth is expected to drop to 3.1% in 2017 to 1.2% in 2018. EU commissioner for economic and financial affairs, taxation and customs Pierre Moscovici said that "the European economy has proven resilient to the numerous shocks it has experienced over the past year." However, he emphasized that "with uncertainty at such high levels, it's more important than ever that we use all policy tools to support growth."

French FM Sapin Hit Back at Navarro

French finance minister Michel Sapin hit back at US president Donal Trump's advised Peter Navarro's criticism on Germany. Navarro said Germany exploited the low exchange rate of Euro. Sapin plainly said that "these attacks clearly make no sense for a number of reasons". Firstly, Euro moved freely and ECB is independent to Eurozone's member countries. And, "the ECB never tries to manipulate the exchange rate of the euro to achieve trade or competitive policy goals." Meanwhile, "the euro is the currency of the entire euro zone. On the international level what counts is the surplus of the entire Eurozone, not that of Germany."

European Yields Surged on Political Risks

Treasury yields rose solidly last week in France, Italy and Spain as political risks intensified in Europe. Rating agencies including S&P and Moody's have warned of sovereign default should far right French presidential candidate Marine Le Pen's plan to redenominate the country's 1.7 trillion euro public debt into francs materialise. According to Moritz Kraemer, S&P's head of sovereign ratings, "there is no ambiguity here [about the default]… If an issuer does not adhere to the contractual obligations to its creditors, including payment in the currency stipulated, [we] would declare a default". Moreover, Alastair Wilson, head of sovereign ratings at Moody's, also suggested that any country leaving the euro would be in default if changing the currency of its debt caused investors to lose out financially relative to the original promise. He added that the consideration is whether "investors will be able to get back the value they put in, when they expected to get it back".

Fed Chair Yellen to Highlight the Week

On the data front, Japan Q4 GDP rose 0.2% qoq, below expectation of 0.3% qoq. GDP deflator dropped -0.1% yoy, above expectation of -0.2% yoy. German WPI rose 0.8% mom in January versus expectation of 0.3% mom.

Looking ahead, Fed chair Janet Yellen's semiannual testimony to Congress is the main focus of the week. Yellen will testify before the Senate on Tuesday and the House on Wednesday. Markets would look for signals on any change on Fed's forecasts of three rate hike this year. Some might also want to get hints on chance of March high. However, based on uncertainties over the fiscal policies Trump would adopt, it's likely that Yellen would sound non-committal. As of Friday, fed fund futures are pricing in 13.3% chance of March hike, and 67.3% chance of hike by June.

Here are some highlights for the week ahead:

• Tuesday: Australia NAB business confidence; China CPI, PPI; German GDP, CPI final, ZEW; Italy GDP; Eurozone ZEW, industrial production; Swiss CPI, PPI; UK CPI, PPI; US PPI
• Wednesday: UK employment; Eurozone trade balance; US CPI, retail sales, Empire state manufacturing, industrial production, business inventories, NAHB housing index
• Thursday: Australia employment; ECB monetary policy accounts; US housing starts and building permits, jobless claims, Philly Fed survey
• Friday: New Zealand retail sales; Eurozone current account; UK retail sales; Canada foreign securities purchases; US leading indicator

EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.0608; (P) 1.0638 (R1) 1.0668; More.....

EUR/USD recovers mildly after dipping to 1.0670. But intraday bias stays on the downside with 1.0713 minor resistance intact. Corrective rise from 1.0339 should have completed at 1.0838 already. Deeper decline should now be seen to retest 1.0339 low. Decisive break there will confirm resumption of medium term down trend. On the upside, however, above 1.0713 minor resistance will delay the bearish case and turn bias neutral first.

In the bigger picture, whole down trend from 1.6039 (2008 high) is in progress. Such down trend is expected to extend to 61.8% projection of 1.3993 to 1.0461 from 1.1298 at 0.9115. On the upside, break of 1.1298 resistance is needed to confirm medium term bottoming. Otherwise, outlook will stay bearish in case of rebound.

Economic Indicators Update

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The prospects of U.S President Donald Trump unleashing a "phenomenal" tax plan in the coming weeks have boosted risk sentiment consequently elevating global stocks. Asian shares cemented gains during early trading on Monday with the renewed Trump-on trading mood propelling European markets into the green territory. Wall Street may be poised to trade higher if the bullish momentum from Asia and Europe coupled with the "Trump effect" encourages investors to seek riskier assets. Although there is a possibility of stocks following a positive trajectory this week from the rekindled risk appetite, the threat of Trump's "phenomenal" tax plan falling short of market expectations may limit upside gains.

Dollar revived by Trump

The Greenback staged a sharp rebound last week after U.S President Donald Trump promised a "phenomenal" tax plan which was seen as supportive of US economic growth. It is becoming increasingly clear that the Dollar's value has been dictated by Trump this quarter with optimism over fiscal stimulus, infrastructure spending and tax cuts fuelling the bull rally. Expectations of higher US interest rates in the future have also played a part in supporting the Greenback with prices likely to remain buoyed in the medium to longer term. While prices may be supported in the longer term, there is a risk of bears attacking the Dollar in the short term if the pending tax announcement in the coming weeks leaves participants empty handed. From a technical standpoint, the Dollar Index remains slightly pressured on the daily charts with weakness below 100.50 encouraging a further decline lower back towards 100.00.

Yen remains a friend in times of uncertainty

The Japanese Yen found itself exposed to downside risks against the Dollar on Monday after the combination of soft domestic data from Japan and the risk-on trading environment enticed bears to install repeated rounds of selling. Japans economy grew by 0.2% in the final quarter of 2016 which continues to highlight how soft consumer spending, tepid inflation and external headwinds have impacted the third largest economy in the world. With uncertainty still a dominant theme in the longer term, the appetite for the Yen may heighten consequently punishing Japanese exporters further. The USDJPY continues to fulfil the prerequisites of a bearish trend on the daily charts as there have been consistently lower lows and lower highs. Weakness below 113.50 created from risk aversion could trigger a further selloff lower towards 112.50.

Currency spotlight - EURUSD

The slew of elections in Europe combined with the rising threat of Eurosceptic parties disrupting the unity of the Eurozone has exposed the Euro to heavy losses. Sentiment remains bearish towards the EURUSD and recent reports of Greece's debt crisis returning with full forces has encouraged bearish investors to attack the currency repeatedly. The horrible combination of heightened political risks, uncertainty and a resurgent Dollar in the longer term could send the EURUSD lower towards 1.0500. Technical traders may observe how the EURUSD reacts to the 1.0650 resistance with weakness acting as a signal for sellers to send prices lower towards 1.0500.

Commodity spotlight - WTI Crude

WTI Crude remains entangled in a fierce tug of war as optimism over OPEC cutting oil production coupled with fears of U.S shale pumping oil incessantly keeps investors on edge. While last week's unexpected draw in U.S gasoline inventories bolstered oil as optimism rose over demand remaining healthy in the world's largest oil market, fears of U.S shale impacting the OPEC agreement capped oil prices below $54. Oil markets may be injected with extreme levels of volatility this quarter if fears resurface over the oversupply in the global markets making a return. Technical traders may observe how WTI crude reacts to the $54 resistance level with weakness potentially opening a path lower towards $52.

Monday February 13: Five things the markets are talking about

Stateside, the markets attention this week turns to Fed Chair Yellen semi-annual testimony in Congress (Feb 14th and 15th 10:00 EST). Investors will be looking for more clues on how probable are the expectations of a March rate hike.

Note: The last FOMC decision has dented those probabilities (+21%) due the uncertainty with the fiscal side of the U.S economy. On the weekend, Fed vice chair Fischer stated that there is "significant uncertainty about what Congress and the Administration will do with fiscal policy."

Elsewhere, there are no central bank meetings this week, but the ECB's minutes from January's meeting will be released on Thursday. Expect investors to study the text for policy clues going forward.

Internationally, the Eurozone, Germany, Italy and Japan will report GDP data, while price data, both consumer and producer, again will give the market a better understanding on global "inflation."

After Canada's 'phenomenal' jobs report on Friday, other commonwealth countries get their opportunity this week - U.K and Australia.

1. Equities get the green light

The "Trump trade" is on the rise again, supporting global stocks and bond yields as investors bet that the U.S. president's tax reform plans will boost economic growth and corporate profits.

Following on from Friday's record high closes on Wall Street, Asian equities overnight have rallied to an 18-month, while Euro stocks rise for the fifth consecutive session this morning - their longest winning stretch for two months.

In Japan, the Nikkei share average rallied to a two-week high overnight, supported by a weaker yen (¥114.00) and relief that talks between U.S and Japan yielded no negative surprises. The Nikkei gained +0.4%, while the broader Topix gained +0.5%.

In Hong Kong, shares closed at a four-month high, supported by the materials sector following a rally in commodities prices and capital flows from the mainland. The Hang Seng index rose +0.6%.

In China, the main stock indexes rose for their fourth straight day of gains to a fresh two-month high, as the materials sector underpinned the market. The blue-chip CSI300 index rose +0.7%, while the Shanghai Composite Index gained +0.6%.

In Europe, the Stoxx 600 has added +0.2%, heading for a fifth straight gain for the longest winning streak of the year, mostly supported by financials. While mining stocks have dragged the FTSE 100 higher at the open, with metals prices behind the sector's gains.

U.S stocks are set to open in the black (+0.1%).

Indices: Stoxx50 +0.4% at 3285, FTSE flat at 7259, DAX +0.5% at 11731, CAC-40 +0.6% at 4857, IBEX-35 +0.3% at 9405, FTSE MIB +0.5% at 18947, SMI flat at 8454, S&P 500 Futures +0.1%

2. Oil falls on rise in U.S. drilling

Crude oil prices start the week on the back foot in response to growing evidence that U.S. production is rising and as some investors unwound positions ahead of OPEC's first report on compliance with its deal to cut production.

Brent crude futures are down -45c at +$56.25 a barrel, while West Texas Intermediate (WTI) crude slipped -41s to +$53.45 a barrel.

The Crude 'bull' feels a tad more comfortable liquidating ahead of the release of the monthly OPEC report (due out shortly). Also providing pressure, another increase in U.S. rig counts.

Note: U.S. oil drillers have added the most drilling rigs since 2012 over the past month, bringing the total count to 591 rigs, the most since October 2015 (Baker Hughes weekly report).

This rise in U.S. activity comes just as some oil producers are reducing output to reverse global oversupply in a bid to prop up prices.

Gold sees red (-0.31% to +$1,230.22) as the dollar strengths on the back of a smooth meeting between Trump and PM Abe that saw no mention of currency policy.

3. Sovereign yields back up, a tad

U.S Treasuries have extended losses after Friday's January import prices came in higher than expectations.

Note: Prices were already slightly lower before the report, holding their momentum from when President Trump halted a three-day rally by suggesting he would unveil a tax overhaul plan within the next three weeks.

Fed Chair Yellen testifies before Congress this week with the opportunity to reset currently low expectations about the possibility of a March interest-rate increase.

U.S 10-year Treasury notes have backed up +1bps to +2.42%.

In Germany 10-year bond yields have increased +2bps to +0.33%, while French yields have increased +5bps to +1.03%.

Note: The fear of "Frexit" - France's far-right candidate Marine Le Pen presented her program for such an exit yesterday - should continue to widen periphery/bund spreads.

Down-under, Aussie 10-year bonds have declined, pushing yields up +1bps to +2.71%.

4. Dollar finds some mojo, but not much

With the market focus again shifting to President Trump's plan to overhaul business taxes and not criticizing Japan's currency policy saw the USD print a two-week high outright against yen overnight (¥114.16) before retreating towards the ¥113.70 ahead of the U.S open.

The EUR again has held its key support at the €1.06 and remains confined to a tight trading range, trading atop of the €1.0645 area. Dealers have been noting that technical momentum would likely to rise on the break of €1.0600 area on a sustained basis.

Sterling is holding ahead of the £1.2525 level with some key data out of the U.K this week (CPI on Tuesday, Jobless claims on Wednesday). The market remains cautious that future data could start to show bigger signs of weakness ahead of the March trigger of Article 50 for the Brexit process. Pound bears are looking to sell on dollar weakness.

5. E.U raises growth forecasts, amid risks from Brexit and Trump

Earlier this morning, the EU raised their economic growth forecasts for 2017 - they are predicting growth across the bloc even as it faces mounting political risks and uncertainties.

The European Commission said the bloc had shown its "economic resilience to shocks last year, when the U.K. voted to leave the union."

In the latest of its projections (published three times a year), the commission said growth in the 28-country EU was expected to be +1.8% in 2017, up from +1.6% forecasted in November.

EU officials also increased their 2016 growth expectation to +1.9% from +1.8% while keeping their estimate for 2018 steady at +1.8%.

Note: This morning's report come with the usual disclaimer - global uncertainties - Trump's stance on key policy areas and the U.K's plan to trigger Brexit talks next month - means that "downside risks have increased" to the bloc's forecasts.