US Nonfarm Payrolls hogs limelight

There is no denying the fact that Federal Reserve Powell has already warned the street that the central bank is prepared to raise rates further to bring down persistent inflation. However, the release of the US Nonfarm Payrolls (NFP) data on Friday will provide more cues.

According to the estimates, the official US Employment data is expected to show a decline in the number of payrolls added in February to 203K from the former release of 514k. A figure of 203K is not so bad but looks worthless in front of January’s 514K figure. Investors should be aware that a figure of 514K was an exceptional one in the past seven months.

Apart from that, the Unemployment Rate is expected to remain steady at multi-decade low figures. Also, the Average Hourly Earnings are expected to increase to 4.8% on an annual basis as the shortage of labor would be offset by higher pay-off. Higher funds in the pocket of households might bring more resilience to consumer spending.

Weak German Retail Sales look insufficient to press down hawkish ECB bets

The spree of contracting German Retail Sales continued on Wednesday as households are facing higher price pressures. Individuals are struggling to offset the impact of inflation-adjusted prices of goods and services as the increment in the labor cost index is lower than the pace of the rising Consumer Price Index (CPI). Annual German Retail Sales (Jan) contracted consecutively for the ninth time. The economic data contracted by 6.9% while the street was expecting a contraction of 6.1%. Also, monthly Retail Sales data contracted by 0.3% against an expansion of 2.0% as expected.

Despite contracting German Retail Sales, the European Central Bank (ECB) could not consider a slowdown in the policy-tightening pace as the current inflation is four times the desired level. European Central Bank President Christine Lagarde is expected to continue the 50 basis points (bps) rate hike cycle in March to tame the stubborn inflation.