The Barjisiya oil fields in Iraq, where the advance of ISIS has destabilized oil markets. (AFP PHOTO / ESSAM AL-SUDANI)
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Iraq will be foremost in investors' minds in the coming week as oil price risk has returned to markets, complicating the task for central banks, whose policies are beginning to diverge for the first time since the global financial crisis. Oil prices neared nine-month highs late last week, touching $115 a barrel, and the advance of militants in Iraq – the second-largest OPEC producer – is destabilizing oil markets. Investors will be watching a range of data, from German and Japanese consumer prices to first-quarter U.S. GDP, to see how the Federal Reserve, the European Central Bank, the Bank of England and the Bank of Japan respond.Until now, falling energy prices have partly been responsible for the eurozone's low level of consumer price inflation, which the ECB considers to be in its "danger zone".Federal Reserve chief Janet Yellen cited reasons for optimism about the world's biggest economy last week, including household spending and a better jobs market.For now, events in Iraq and an oil-driven increase in inflation seem to be less pressing for the Fed.
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