Eurozone begins slowly turning around

• Russian confidence at a low as ruble plummets

• Eurozone begins slowly turning around

• Falling UK CPI crucial ahead of US release

• MPC minutes key as falling inflation could change outlook

• FOMC announcement focused around potential language change

Market volatility appears to be the order of the week, as a range of economic and political announcements mean that we have seen traders find it difficult to know whether we should be coming or going. A US fiscal deal, sharp movements in the oil price, a Russian central bank freakout, UK bank stress tests and a plummeting CPI has contributed to a particularly notable week where it can be quite tough to actually predict in which direction the indices will end up at the end of the day. This has been exemplified perfectly by the Asian markets overnight, which saw the likes of the Hang Seng and Nikkei swing between major losses and gains. Ultimately the current market indecision shone through with the Nikkei ending up higher while the Hang Seng closed lower. We are expecting the European markets to have more of a consensus, with the FTSE100 likely to open around -60 points, DAX -121 points and the CAX -66 points.

Yesterday saw an extremely volatile European session, personified by an absolute lack in the Russian central bank, a very mixed set of data points out of the eurozone, along with a UK CPI level that was the lowest since 2002. The Russian decision to hike their interest rate by 6.5% was a bold one to say the least, showing exactly how serious they are about halting the recent slide in the value of the ruble. However, the markets were far from tempted by these massive rates and instead saw it as an act of desperation, leading to an 11% fall against the dollar; the steepest fall since the 1998 Russian financial crisis. With Obama due to announce another set of sanctions in the very near future, it is clear that Putin may have to change tact to get their economy back on track and that can only really be a shift in Ukraine policies given that oil prices appears to only be heading in one direction.

The eurozone's weaknesses appear to be abating to some degree, with the announcement of an absolutely massive ZEW report, along with a largely positive range of PMI figures. Exports appear to be on the rise and with a weakening oil price alongside an already weak euro, the conditions appear to be conducive to enabling a recovery in the region. Whilst it is not really worth getting too excited, this is a sign that the recent downturn may be ending and now we are moving towards one of a recovery.

UK CPI fell to the lowest level since 2002, as a rate of 1% shocked the markets and led many to believe that the BoE will have no choice but to become even more accommodative going forward in terms of interest rate hike timelines. One thing is clear and that is that this slump in inflation is to a large extent driven by falling oil prices and thus central bank policy is unlikely to really impact that factor. Should the BoE manage to compensate for this fall in inflation by raising core inflation (without energy), then they also run the risk of seeing the headline figure skyrocket once this game of chess being played by Saudi Arabia is over and prices return to 'normal' in the energy market.

What will be interesting is whether yesterdays figure is indicative of the global experience and that will be seen later today, when the US CPI number is released. So far, the US has managed to keep their head above the water somewhat, with disinflation in Europe having less of an impact upon their level of CPI. However, as falling oil prices are gradually factored into the prices at the pump and for firms, it will be likely that the US should follow suit. Both the core and headline figures are expected to fall, but given the experience within the UK, there is the possibility of a surprisingly larger fall than estimated.

The European session is looking likes it will be largely dominated by the UK, where the BoE minutes are released simultaneously alongside the jobs report. The BoE clearly has a penchant for releasing data points together, with the announcement that soon these minutes will be released alongside the initial announcement, starting in 2015. However, for now the focus will be upon the belated outlook seen within the meeting earlier this month and given the movement within inflation recently, there was an expectation that we could have seen votes change in favour of no change in the interest rates. This was not the case, however there is likely to have been a change in outlook from the committee, as the threat of further disinflation became increasingly evident. Thus the minutes will be crucial in determining whether the MPC is worried about the impact falling oil prices will have upon inflation and what they would do should it fall like it has yesterday.

Meanwhile, the US session will see the release of the latest FOMC decision, with many hoping for a change in language from Janet Yellen. The US economy has been booming of late and despite the woes felt across the likes of the eurozone and Japan, they are clearly not too worried about the threat of contagion as many expect an even more bullish Fed with month. This months meeting will be dominated by one single phrase and whether it is included or not will likely be the major determinant of market direction off the back of the meeting. That phrase relates to the FOMC's promise to keep rates low for a 'considerable time'. Should this be removed, then the timeline for a rate hike has surely got to be shortened in response. However, given the experience of the UK in relation to CPI, it is likely the Fed will be pragmatic at a time when oil prices are starting to hit global inflation levels. Thus I do not see it to be sensible for the FOMC to change their statement at a time when their inflation levels could follow suit, leaving Yellen and co in a sticky situation where the 'considerable time' phrase were to be put back into the statement.