Markets could be very volatile during Yellen's speech this evening

• UK public sector net borrowing figures key after Conservative election victory;

• Latest German Ifo reading likely to disappoint following ZEW and PMI releases;

• Draghi and Carney to speak in Portugal this morning;

• Markets could be very volatile during Yellen’s speech this evening.

The Friday leading into the bank holiday weekend can quite often be a little quieter and see lower trading volumes, with traders turning it into an extended break. Given some of the data being released today and the number of central bankers taking part in events in Portugal and Rhode Island, I think today is going to be a million miles from slow and boring.

On the data front, we’ll get an update on UK public finances this morning. These are likely to be a key focal point over the coming three or four years following the Conservatives pledge to get rid of the deficit which will require deep spending cuts. They have no one to blame this time around, having won a majority at the election, and they haven’t set themselves an easy task. The figures for the last few months have been very good but this is not unusual in the final months of the fiscal year. May is typically another fairly good month for borrowing, although we are expecting a slight uptick to £7.9 billion.

The latest survey from Ifo is expected to show confidence among German businesses falling slightly in May, which would be consistent with many other surveys conducted recently. Manufacturing and services PMI readings were both disappointing this month, as was the ZEW survey earlier this week which came in well below expectations.

While the depreciating euro is offering support the eurozone economy and is likely to continue to do so, the uncertainty surrounding Greece is creating a lot of uncertainty for the region and this is being reflected in these surveys. Confidence is a fragile thing in the eurozone and given the experience of the last five years, businesses and consumers cannot be blamed for feeling a little on edge every time Greece teeters on the edge of default and a possible exit. Given the surveys earlier in the week, I think 108.3 today may be a little optimistic, particularly if the ZEW number is anything to go by.

Throughout the day we’ll hear from a number of key central bank figures, starting with Mario Draghi and Mark Carney this morning. Draghi has certainly been the more active of the two in the last 12 months having implemented a number of measures including negative interest rates and quantitative easing in an attempt to stave off deflation. The ECBs efforts appear to be working, with the region having edged out of negative territory, although it’s still very early days yet and I expect Draghi to stick to previous commitments to continue the QE program until next September, or inflation rises towards target.

He may be questions on the recent comments of Benoit Coeure, who suggested that bond buying could be front-loaded in an attempt to bring some stability back to the bond markets that were in the midst of a strong sell-off at the time. As it turns out, Coeure’s comments alone seems to have settled them for now, although I do expect Draghi to be pressed on the prospect of this further.

Heading into the US session things will only get busier in the markets. We’ll get the latest CPI figures from the US, which are expected to show prices rising by 0.1% in April. While this is not the Fed’s preferred measure of inflation, it is the first reading we get and therefore provides good insight into the core PCE price index that the central bank does use. A decline to 0.1% would be another setback for those officials wanting to see a rate hike this year and could also be one of the topics of questioning towards Fed Chair Janet Yellen when she speeks later on in Rhode Island.

Many people have viewed this as the key event this week, rather than the minutes that were released on Wednesday as this provides a more up to date view on the economy and whether it changes the Fed’s view on the economic outlook. Until now, the Fed has referred to the first quarter slowdown as “transitory” but with the disappointing data continuing into April, it will be interesting to see whether they continue with this rhetoric or offer a more dovish tone.

The FTSE is expected to open 6 points higher, the CAC 7 points higher and the DAX 18 points higher.