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UK Data  

• Monday 9.30am PPI Input for February previous -2.0%y/y
• Monday 9.30am PPI Output for February previous 2.1%y/y
• Tuesday 12.01am RICS Housing Survey for February previous 28.0 3m%bal
• Tuesday 9.30am Trade Balance for January previous -£7.1bn
• Wednesday 9.30am Average Earnings for January previous 4.0 3m avg.

Last week saw the Bank of England leave interest rates on hold at 5.25% and attention now turns to the minutes from the meeting due out next week. Elsewhere, data last week from the UK was generally disappointing with CIPS Services PMI (57.4) Industrial Production (0.1%m/m) and Manufacturing Production (-0.2%m/m) all coming out below expectations. This week, the focus will be on PPI and average earnings data for any indication as to whether or not inflationary pressures are likely to force the MPC into action again in the months ahead.

US Data 

• Tuesday 1.30pm Retail Sales for February previous 0.0%m/m
• Wednesday 1.30pm Import Prices for February previous -1.2%
• Thursday 1.30pm PPI for February previous -0.6%m/m
• Thursday 1.30pm EmpireState Survey for March previous 24.4
• Thursday 2.00pm Treasury Capital Inflows for January previous $15.6bn
• Friday 1.30pm CPI for February previous 0.2%m/m
• Friday 2.15pm Industrial Production for February previous -0.5%m/m

The key event last week was the US employment report where the headline Non Farm Payrolls came out in line with expectations showing 97k new jobs created outside the agricultural sector. This, coupled with a sharp revision for January to 146k, unemployment which fell to 4.5% and average earnings +0.4%m/m helped keep the Dollar firm across the board`. Whilst the Fed are still seen as unlikely to hike rates in the months ahead, this data adds further weight to the argument that they are also unlikely to be able to cut rates any time soon. This week, the market will look towards PPI, CPI and Import prices for any signs of further inflationary pressures.

Euro Data 

• Tuesday 10.00am German ZEW Economic Sentiment Survey for March previous 2.9
• Tuesday 10.00am EU Industrial Production for January previous 1.0%m/m
• Thursday 10.00am EU HICP for February previous 1.8%y/y

As widely expected, the ECB raised interest rates by 25bps to 3.75% when they met last week. In the accompanying statement, Trichet stated that monetary policy continues to remain accommodative. One change that he did make, was to say that rates were ‘moderate’ as opposed to ‘low’ indicating that we may be nearing the end of the current tightening cycle. This week, the main highlight will be the German ZEW survey where the market will be looking for any signs that economic sentiment in Europe’s largest economy is recovering following a series of disappointing numbers in recent months.

Interest rate outlook