The anticipation is based on Powell’s blessing on the Reuters rates

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

Much hinges on Federal Reserve Chairman Jerome Powell’s speech later this week, but until then, stocks look set for a bumpy ride as investor confidence builds for dovish rhetoric from the world’s most powerful central banker.

Asian stocks hit a one-month high on Tuesday, and stock futures mostly point to a positive open as London and New York wake up.

It even shrugged off the weight of a stronger yen and hit its highest level in more than two weeks.

A chorus of Fed speakers in recent days have signaled their intention to cut interest rates in September, making it all the less likely that Powell will deviate from the script on Friday when he speaks at the central bank’s annual meeting in Jackson Hole, Wyoming.

Markets are already fully pricing in 25 basis points of easing next month, so the focus will be on whether Powell hints at the possibility of an even bigger cut and what he says about the outlook for the world’s largest economy.

Elsewhere, Sweden’s central bank is due to announce a policy decision later on Tuesday, with analysts expecting rates to be cut by a quarter of a percentage point. They see two more cuts likely before the end of the year.

Canada will report figures for July inflation, which is seen slowing to 2.5% on an annual basis from 2.7% in June. This would likely strengthen the case for further rate cuts from the Bank of Canada.

In Asia, China left its benchmark lending rates at a monthly peg on Tuesday, as expected, amid shrinking interest margins at lenders that have limited Beijing’s easing efforts.

Key developments that could influence markets on Tuesday:

– German producer prices (July)

– Bostic from the Fed, says Barr

– The Riksbank rate decision

– Canada Inflation Report (July)

(By Rae Wee; edited by Edmund Klamann)