Euro Week Ahead: Global Market Turmoil To Test EMU Resilience

European investors head into what is effectively the first full trading week of the year preoccupied with developments in the global economy and major questions as to the resilience of the currency area's recovery and the support offered by the European Central Bank.

China's uneven attempts to manage its currency - and indeed its financial markets - have roiled stock markets around the world, wiping out more than $4 trillion in value, sent crude prices into a tailspin to its lowest level in 12 years and raised serious concerns for the future of the global economy.

Against that backdrop, Europe's fragile recovery looks set to face the twin challenge of slowing exports and worryingly low inflation, which remained cemented at 0.2% in December despite the array of policy tools deployed by the ECB.

That dynamic is likely to form the core of discussions at a farewell symposium in honour of former Bank of France Governor Christian Noyer in Paris. The ECB's Chief Economist, Peter Praet, will participate in a round-table discussion at 11:30 CET while new BoF Governor Villeroy de Galhau and Bundesbank President Jens Weidman are also expected to attend.

The Bank's policy response - in particular its recent decision to lower its deposit facility rate and extend its programme of quantitative easing - will also be in focus Thursday with the release of public accounts of the December 3 meeting in Frankfurt (13:30 CET).

Eurostat will publish industrial output data Wednesday (11:00 CET) after disappointing figures from Germany last week suggest the current China turmoil could impact the region's broader manufacturing sector.

Germany's industrial output fell slightly in November, disappointing market expectations and taking some shine off earlier positive manufacturing order data. November production contracted by -0.3% on October, almost cancelling out the increase seen in the previous month. The November increase was well the consensus forecast, which had anticipated production to grow by 0.5%.

Destatis will publish its first estimate of fourth quarter GDP Thursday at 10:00 CET, with some analysts looking for an annual growth rate of 1.7% for Europe's largest economy.

Other economic releases of note for the week will come from Spain (November industrial output at 09:00 CET Monday), France (December inflation data at 08:45 CET) and Italy (November industrial output at 10:00 CET Thursday).

The week concludes with the first Eurogroup gathering of 2016 in Brussels, where the slow pace of Greece's latest adjustment programme is likely to test the patience of euro area Finance Ministers.

Eurogroup President Jeroen Dijsselbloem told reporters in Amsterdam last week that a full review of Greece's July 2015 bailout - and pension reforms in particular - is likely to take "rather months than weeks".