It has been a rather quiet session, which saw Japan modestly lower dragged again by a lower USD/JPY which hit fresh 17 month lows around 170.6 before staging another modest rebound and halting a six-day run of gains; China bounced after a slightly disappointing CPI print gave hope there is more space for the PBOC to ease; European equities rose, led by Italian banks which surged ahead of a meeting to discuss the rescue of various insolvent Italian banks, while mining stocks jumped buoyed by rising metal prices with signs of a pick-up in Chinese industrial demand.

The Italian bank rescue euphoria spilled over to the US where equity futures spent most of the session around the flatline before a sudden buying jolt after the Europen open sent them almost instantly to session highs. WTI started off stong, immediately printing above $40 on the break but has since faded the jump and was down 0.5% at last check even as the USD has dipped, with the DXY sliding once again.

European shares erased earlier losses of as much as 0.8 percent as measures of banking stocks and commodity producers posted the biggest gains of the index’s 19 industry groups. Spain’s Banco  Santander SA and Italy’s Intesa Sanpaolo SpA led the advance, while Anglo American Plc and ArcelorMittal rose at least 3 percent. As a result, the Stoxx Europe 600 Index extended Friday’s gains, putting it on course for the biggest back-to-back advance since March.

The U.S. earnings season unofficially kicks off later Monday, when Alcoa Inc. reports quarterly results after markets close. European peers including Tesco Plc and Sodexo SA are scheduled to release financial reports this week. Analysts are forecasting profit at companies in Europe’s Stoxx 600 index will shrink in 2016, reversing earlier calls for earnings to improve.

Some strategists were concenred about what this quarter’s earnings season will reveal: “Investors won’t find it easy to believe in the rally until they get more evidence of a business-cycle recovery,” Allan von Mehren, chief analyst at Danske Bank A/S in Copenhagen, told Bloomberg. “The good news is that we already know that the beginning of the year was pretty tough for most companies, so the bar has been set pretty low for this earnings season.”

Others were more worried about the ongoing strength of the Japanese currency: “Yen strength is really hurting at the moment,” Steve Brice, chief investment strategist at Standard Chartered Bank, told Bloomberg TV in Singapore. “It’s shaken a lot of people’s confidence in Abenomics and the underlying thesis behind holding Japanese equities. The extent of the strength we’ve seen has surprised pretty much everybody.”

All that really matters, however, is what Janet Yellen and company will say or do, and what the closing price pegged for the S&P500 at the New York Fed is today. And speaking of that, recall that today at 11:30AM the Fed will hold a closed, emergency session behind closed doors where rates will be discussed, followed by an impromtpu meeting between Obama, Biden and Yellen in the afternoon.

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Looking at regional markets, Asian stocks traded relatively mixed after inflation figures suggested deflationary pressures eased, while Nikkei 225 underperforms on JPY strength. JPY weighed on the Nikkei 225 (-0.4%) with a contraction in Machine Orders adding to the dampened sentiment, while ASX 200 (-0.1%) is also negative, although losses have been stemmed amid advances in energy. Shanghai Comp (+1.6%) was underpinned by commodity strength and a mixed bag of Chinese data in which CPI missed estimates but matched its 22-month high, while PPI was better than expected despite declining for a 49th consecutive month. 10yr JGBs saw muted trade with prices flat despite a cautious tone in Japan, while the BoJ refrained from entering the market under its bond-buying program.

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