LONDON, Sept 23 (Reuters) - Currencies are hogging the market spotlight with sterling at record lows and the Bank of Japan having intervened last week to buy yen for the first time since 1998.
Markets remain on watch for any signs of a ratcheting up in tensions between Russia and the West. And election results from Italy, euro area inflation numbers and U.S. and Chinese data also give investors plenty to chew over.
Here's a look at the week ahead in markets from Kevin Buckland in Tokyo, Tom Westbrook in Sydney, Lewis Krauskopf in New York, Danilo Masoni in Milan, and Dhara Ranasinghe and Karin Strohecker in London. Graphics by Vincent Flasseur, Vineet Sachdev and Pasit Kongkunakornkul.
1/ DOLLAR WHEN?
Japan's authorities finally had enough of a weak yen and intervened to stem a sharp decline against the dollar.
But will it work? The runaway greenback is up more than 20% on the yen this year, and some doubt it's got much left in the tank. But as U.S. rates rise, Japan's are stuck just below 0% and unlikely to budge.
So the case for a strong dollar remains. Japan, alongside neighbours China and Korea also pushing back on the dollar, may find itself fighting fundamentals, the market and the Fed.
Dealers in Seoul suspect authorities have already been selling dollars, but the won keeps sliding. Likewise, China's yuan has forged new lows although the central bank has pushed back via the trading band. Friday's China PMI readings, if disappointing, could add to the bear case.
2/ 'NOT A BLUFF'
Russian President Vladimir Putin's military mobilisation order, threats to use nuclear weapons and a push to annex swaths of Ukrainian territory mark a new stage in the seven-month old conflict.
The announcements - coinciding with the diplomatic highlight of the year that is the UN General Assembly meeting - were condemned globally and triggered fresh protests in Russia, where draft-age Russians headed abroad to escape Moscow's biggest conscription drive since World War Two. Russia calls its actions in Ukraine "a special military operation".
The latest escalation has reverberated across markets: oil prices are sharply higher, raising the spectre of more pain on the energy front for Europe. Meanwhile, European Union foreign ministers are readying another package of sanctions - their eighth one - which could be formalised in mid-October.
3/ RED HOT
The "flash" estimate of September euro area consumer price data is out on Friday and should show inflation at a fresh record high above 9%.
Investors have already ramped up expectations for another 75 bps, ECB rate hike in October, so the data shouldn't change the near-term rate outlook.
Yet any signs that underlying price pressures are broadening out, could further push up expectations for where rates in the bloc end up. The ECB is increasingly hawkish in its rhetoric and some ECB watchers say a mega 100 bps rate hike cannot be ruled out in coming months. Indeed, that's what Sweden's Riksbank just did, as did the Bank of Canada in July.
4/ TESTING TIMES
Can the U.S. consumer defy sizzling inflation and rising borrowing costs? Tuesday's consumer confidence measure will indicate how this key pillar of the economy is holding up.
Last month, the Conference Board's overall consumer confidence index rebounded to 103.2, ending three straight monthly declines. This month's index is expected to come in at 104, a Reuters poll suggests.
In one positive sign, data earlier this month showed U.S. retail sales unexpectedly rebounded in August as Americans ramped up purchases of motor vehicles and dined out more thanks to lower gasoline prices.
But with stock markets faltering and bond yields climbing, whether consumers remain upbeat is yet to be seen -- especially given a Fed intent on bringing inflation down even at the expense of a sharp slowdown in growth.
5/ NO DRAMA HERE?
Giorgia Meloni looks set to become Italy's first female prime minister at the head of its most right-wing government since World War Two after leading a conservative alliance to triumph at Sunday's election.
Provisional results showed the rightist bloc should have a strong majority in both houses of parliament, potentially giving Italy a rare chance of political stability after years of upheaval and fragile coalitions.
There had been little visible stress in markets ahead of the election since Meloni has embraced an EU-friendly face, reassuring investors.
Italy's 10-year bond yield gap over Germany has widened from the post-pandemic lows but is far from levels seen in 2018.
However, Meloni and her allies face a daunting list of challenges, including soaring energy prices, the impact of war in Ukraine and renewed slowdown in the euro zone's third-largest economy.
(Compiled by Dhara Ranasinghe; Editing by Ana Nicolaci da Costa and Kenneth Maxwell)
