The focus of the economic calendar this week will be on U.S.

The focus of the economic calendar this week will be on U.S. inflation data and the start of the earnings season. Inflation data for December could determine the strength of the Fed's next interest rate hike, while the earnings report will provide important insight into the state of the economy amid recession fears. In addition, UK GDP, Japanese inflation data and economic data from the Eurozone are also in focus.

Here are five major financial market events to watch this week:

1. The heavy hit of the US CPI will affect the Fed's next interest rate hike

The United States will announce the consumer price index (CPI) for December on Thursday (12th), and economists expect the annual rate of core inflation to reach 5.7%. Signs that price pressures continue to ease will not only reinforce expectations that the Fed will end its most aggressive tightening cycle in decades, but could also boost speculation that the central bank will cut interest rates later this year.

Data released by the United States on Friday (6th) showed that although the number of new jobs in December still exceeded expectations, wage growth slowed down and service sector activity shrank, alleviating concerns about the Fed's continuation of its tightening policy path.

Meanwhile, Fed officials acknowledged cooling wage growth and other signs of a gradual slowdown in the economy. Atlanta Chairman Raphael Bostic hinted that at the Fed's next policy meeting, to be held Jan. 31-Feb. 1, interest rates may be raised by as little as 25 basis points, following a 50 basis-point increase in December.