Last week mixed results were released amid an unexpected drop in Japan’s core machinery orders, with a 7.1% drop in December indicating the stagnating effect of the strong yen and the global slowdown. However consumer sentiment unexpectedly increased to 40 from 38.9 while expected to reach 38.6. Will Japan be able to hold off a deeper decline?

Last week ECB president Mario Draghi’s remark at the ECS press conference provided a loop hole to contribute to the Greek bailout, by suggesting to distribute profits from Greek bonds to Greece. Meantime Greece is in a vicious cycle while the austerity measures posed by the EU paralyze market activity lowering consumption which in turn produces less tax revenues to cover its growing debt. Will Draghi’s suggestion help the struggling nation? Let’s start:

World Economic Forum (WEF) Annual Meetings – Day 1, this time is held in Davos for Bankers, Political, trade & finance Ministers and Commercial leaders from around 90 countries. Can influent market volatility.

The upcoming Greek debt deal certainly helped improve market atmosphere. In the US, jobless claims plunged dramatically to a nearly four-year low of 352,000 claims, 50,000 down from the prior week, while early expectations stood on 387K. The Philly Fed Index reached 7.3 points with a dominant employment factor. These good employment readings give further boost to the recovering job market. Will the job market continue to improve? Let’s start:

In the US, Federal Open Market Committee (FOMC) Meeting Minutes, full record of the FOMC’s latest meeting that provides financial conditions visions on interest rates.

Apart from Germany,a bond sell off was seen in every European country. Will German bonds sell as well? Will the benchmark break? If this happens, the euro’s losses will accelerate. Last week Weekly jobless claims dropped to 388K indicating a gradual improvement in the US job market. Most other US figures were upbeat. These favorable figures give room for cautious optimism in light of the global financial turmoil. Will this improvement continue?

In the US, Producer Price Index (PPI), important consumer inflation sign that value the producer’s goods and services prices, about to reduce from 0.8% on October down to -0.1%, and the Core PPI (not including energy and food) is due to decrease from  0.2% down to 0.1%.

In Canada, Bank of Canada (BOC) Governor Mark Carney, is due to speak in Toronto.

Last week  Leading indicators dropped to 91.6 from 93.8 in July, while Current account increased export surplus, reaching 1.19T from 0.75T in July, and Business confidence improved for the first time in three months, reaching 45.9 from September’s 45.3 indicating recovery, but still below the 50 point line. Will this recovery continue?

Last week Italy became the main player in the EU debt crisis scene overshadowing Greece’s problems of finding a replacement to the newly resigned Prime Minister George Papandreou and struggling to agree on the EU bailout terms. Italy, the third largest member of the EU,  is on the verge of bankruptcy, something the EU cannot afford. The tentative resignation of Prime Minister Silvio Berlusconi did not stop the dangerous collapse in market confidence causing Italian borrowing costs to reach a breaking point, hitting 7.5%. Will this escalation threaten EU existence?