July 8 (Reuters) - Federal Reserve Chair Jerome Powell's testimony and U.S. inflation data top the agenda in the week to come, with U.S. banks reporting earnings and rate decisions due in New Zealand and South Korea.

Meanwhile, the tectonic plates of politics continue shifting, with France's Sunday election following hot on the heels of the UK vote.

Here is your look at what matters for markets in the coming week from Makhaila Gause and Lewis Krauskopf in New York, Kevin Buckland in Tokyo, Yoruk Bahceli in Amsterdam and Marc Jones in London.

1/INFLATION UPDATE

Thursday's monthly U.S. consumer price index reading will shape views on whether the Fed could cut interest rates in the coming months.

The June reading is expected to have climbed 0.1%, according to a Reuters poll, after being unexpectedly unchanged in May.

Data late last month showed another inflation measure, the personal consumption expenditures price index, rose 2.6% on an annual basis - suggesting inflation is cooling, but the measure was above the Fed's target of 2%.

That comes of course after Powell's testimony before Congress on Tuesday. He told a conference in Portugal this week that the U.S. is back on a "disinflationary path," but policymakers need more data before cutting interest rates.

2/BANK EARNINGS Higher interest rates and an uncertain economic environment are casting a cloud over U.S. bank earnings, with the second-quarter reporting season kicking off.

JPMorgan Chase, Citigroup and Wells Fargo will report second-quarter earnings on July 12. Bank of America will release its results on July 16.

The largest U.S. lender, JPMorgan, is expected to report earnings per share (EPS) of $4.69, according to LSEG estimates - below $4.75 a year earlier. Bank of America's EPS is forecast to slide to 79 cents from 88 cents a year earlier, though EPS at Citi and Wells Fargo are projected to climb.

Executives' commentary on the path of interest rates will remain a key focus, especially after industry leaders cited improving conditions for investment banking, analysts said.

3/TAKE TWO

France went back to the polls on Sunday for the second round of its snap election, with a leftist alliance unexpectedly emerging in the top spot but with no group winning a majority.

Centrist President Emmanuel Macron has ended up with a hugely fragmented parliament, potentially weakening France's role in the European Union and elsewhere and making it hard for anyone to push through a domestic agenda.

Market reaction on Monday was muted: French shares fell, the risk premium of French bonds over German ones rose, and the euro dipped on the prospect of tough negotiations on forming a government.

What comes next is uncertain, and there is a risk of policy paralysis that could make it even harder to improve stretched finances in Europe's third-largest economy that have left Paris facing European Union disciplinary measures.

4/PONDERING POLICY PIVOTS

Investors are hungry for clues on whether rate cuts are coming this year at the Reserve Bank of New Zealand and the Bank of Korea. Both central banks have taken a cautious stance amid stubbornly high inflation, and are widely expected to keep rates steady at 15-year highs at their meetings on Wednesday and Thursday, respectively

In New Zealand in particular, policymakers even flagged the risk of another hike this year, with a cut not projected until late 2025. Markets are more optimistic, pricing for a single cut this year to come as early as October, as inflation cools, business sentiment deteriorates and domestic demand weakens.

South Korea has had even more pronounced indications of prices coming under control, but the market consensus is still for no cut until the fourth quarter. Political pressure is mounting though, with President Yoon Suk Yeol calling cuts to keep in step with the U.S. Federal Reserve "unavoidable."

5/BAPTISM OF SEWAGE

New governments face a baptism of fire, but for the UK's just-crowned Labour Party, it will be more of a baptism of sewage on Thursday.

That's when water regulator, OFWAT, announces just how much water firms - most of whom have been relentlessly pumping untreated human effluent into UK rivers for years - can jack up customers' bills. It has the potential to turn nasty.

Britain's biggest water company, Thames Water, which serves more than 16 million customers in and around London and has 15 billion pounds ($19.14 billion) of debt, faces nationalisation unless it can attract vast amounts of new capital to fix its woes.

It has requested bill hikes of 59%, which OFWAT is unlikely to grant given the public mood. But it will need to be enough to convince reluctant investors, who have already started to bail out of Thames, to turn the taps on again.

(Graphics by Kripa Jayaram, Vineet Sachdev, Sumanta Sen, Pasit Kongkunakornul and Prinz Magtulis; Compiled by Karin Strohecker; Editing by Anil D'Silva)