FX Daily

Focus will be on the US employment report and we look for job growth of 235,000 in February in line with consensus. This is a slower pace than in the past six months but still solid. We expect the unemployment rate to tick down one notch to 5.6%. The details of the report will be important to watch – in particular, average hourly earnings, which rebounded in January. A further acceleration in hourly earnings suggests that wage inflation is picking up. For some FOMC members, this is an important signal ahead of a rate increase, although we expect the most important members of the committee to be less focused on wage inflation when judging the right time for lift-off.

In the euro area focus is on the second release of GDP growth in Q4 14 together with the first release of the subcomponents. We expect that the stronger growth at the end of the year was driven by private consumption, which was decent in Q3 and has been further supported by the oil price decline.

German industrial production is also due for release this morning and we expect it to have continued to increase in January and at a faster pace compared to December. This progress should follow as uncertainty has faded and private consumption has prolonged its increase. Added to this, German production is supported by the weakening of the EUR.

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