A look at the day ahead in European and global markets from Rae

Wee

Traders in Europe will be waking up to a nervy currency

market after the yen's sharp reversal from its slide past 160

per dollar on Monday had some speculating Tokyo could be behind

the move while the country was out on a holiday.

The jump in the yen - which took it to a session-high of

156.55 per dollar - came just a few hours after it slid to the

weaker side of 160 per dollar for the first time since 1990,

marking a fresh 34-year low.

Some said the rapid strengthening of the yen smelt like

intervention, but markets will have to wait till Tuesday for any

signals from authorities.

While Japanese authorities had constantly insisted they

aren't targeting any specific levels but rather the pace of the

yen's decline, the Liberal Democratic Party's Takao Ochi said

last week that the 160 level could be it.

Also, if the currency's 5% slide this month has yet to raise

any alarms, then it's unclear what would.

Elsewhere, Germany's preliminary inflation figures for April

are also due later in the day, which could provide a good

snapshot of what to expect when the wider bloc releases its

inflation and economic growth data on Tuesday.

That could strengthen market bets for the European Central

Bank to kick off its rate-easing cycle in June, though

policymakers aren't expected to move very fast thereafter.

Still, the main highlight for the week remains the Federal

Reserve's two-day policy meeting ending Wednesday, where all

eyes will be on what Fed Chair Jerome Powell says with regard to

the central bank's rate outlook.

Much has changed since its last meeting in March, and a

hawkish tone from Powell is pretty much a given with the slew of

solid economic data the U.S. has had in recent times.

While market pricing shows that a September rate cut is

still on the cards, even that is gradually starting to pare

back, based on the CME FedWatch tool.

In the world of electric vehicles, Tesla CEO Elon

Musk arrived in Beijing on Sunday on an unannounced visit, where

he was expected to discuss the rollout of Full Self-Driving

software and permission to transfer data overseas.

His visit came just over a week after he scrapped a planned

trip to India, raising concerns that its expansion plans in the

South Asian country may be put on hold.

Key developments that could influence markets on Monday:

- Germany preliminary CPI (April)

- Euro zone business climate (April)

- Euro zone economic sentiment (April)

(Editing by Jacqueline Wong)