European investors will navigate a series of key data from Germany this week amid questions over the strength and pace of the region's recovery and the potential fate of one of its biggest economies.

Italians will head to the polls Sunday, Dec. 4, to vote on a package of constitutional reforms put forward by Prime Minister Matteo Renzi. The final surveys for the referendum, published by law last week, suggest voters could resoundingly reject the proposals, potentially triggering the collapse of Renzi's coalition government and fresh national elections. 

In what could be a positive sign for the "Si" camp however, Renzi was able to secure a confidence vote win in the lower house of Parliament on Friday that should pave the way for passage of a budget bill later next week. 

Ahead of the events in Italy, however, are a series of data releases from around the region that could have major implications for both the European Central Bank's Dec. 8 policy meeting and fixed-income investors around the world.

Eurostat will publish its first estimate of Eurozone inflation Wednesday following a 2016-high acceleration of 0.6% in the previous month. The consumer price increases, however, remain far from the Bank's "just below 2%" target, and investors will look to both headline and core readings to judge whether the ECB is fully prepared to extend its €1.5 trillion quantitative easing program beyond March 2017.

Benchmark 2-year German bunds, known as schatz, touched a record low -0.75% Friday in anticipation of the QE extension and largely in defiance of an upward surge in bond yield all around the world, including the United States, where 2-year Treasury notes hit a 6.5-year high of 1.17%.

Wednesday also offers what could be an early glimpse in that respect as ECB President Mario Draghi is slated to deliver a keynote speech marking the 100th anniversary of the University of Deusto Business School in Madrid. He's also scheduled to testify before the European Parliament's Committee on Economic and Monetary Affairs on Monday in Brussels.

In a week bereft of headline corporate earnings, investors will also likely focus on data from the region's biggest economy in order to benchmark sentiment amid the global equity rally. Germany's official statistics office, DeStatis, publishes October retail sales data Monday followed by "flash" November inflation readings Tuesday.

Markit Economics will also publish first readings of manufacturing activity in Italy and Spain, followed by final readings form Germany, France and the Eurozone on Thursday. 

Last week, Markit's flash Eurozone PMI reading beat forecasts in November, bolstered by evidence of services sector expansion which bodes well for fourth-quarter GDP growth. The composite PMI unexpectedly rose to an 11-month high of 54.1, while analysts had been looking for little or no change from October's reading of 53.3. (Any reading above 50 denotes economic expansion). Services sector activity hit 54.1 from 52.8, also an 11-month high, while the manufacturing PMI edged to a three-year high 53.7 from 53.5.

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