European FX Outlook: The US inflation is set to reveal how important wages are

What you need to know before markets open

• Japan is set to urge global leading countries of G20 to undertake steps to prevent cryptocurrency use for money laundering.
• Moritomo scandal is still relevant, weighing on Japanese Yen.
• The UK Finance Minister Philip Hammond is expected to deliver a brighter outlook for the UK growth and public finances while delivering Spring Budget statement in parliament. For details read my Preview here.
• The US inflation is due on Tuesday and given the Federal Reserve’s dual mandate on employment and price stability it is the most important macro piece of the puzzle together with NFP labor market report in the US. In terms of figures published, while accelerating inflation supports the rate hike cycle and it is US Dollar positive deceleration has a contrary effect.

Tuesday’s market moving events

• French non-farm, payroll are seen rising 0.3% Q/Q in the final quarter of 2017.
• Spanish harmonized inflation (HICP) is expected to rise 0.1% m/m while rising 1.2% y/y in February.
• The UK Spring Budget statement is expected to deliver upward estimate for both GDP and public finances. For details read my Preview here.
• The US core inflation is expected to rise 1.8% y/y in February, at the unchanged pace from January. The overhead inflation in the US is expected to accelerate to 2.2% y/y in February.
• The Bank of Canada Governor Stephen Poloz is scheduled to speak about a "Today’s Labour Market and the Future of Work" at Queen’s University, in Ontario at 3:30 GMT with the text of the speech available 15 minutes before the speech.
• The Bank of Japan meeting minutes will be released 10 minutes before midnight GMT.

Major market movers

• Japanese Yen is under pressure falling of the highs and trading down 0.5% against the US Dollar in light of Moritomo scandal.

Monday’s macro summary

• Greek industrial production fell -1.7% m/m in January.
• Portuguese CPI fell -0.7% m/m in February while rising 0.6% over the year, falling short of market expectations.
• The private report from management consultants and law firm Clifford Chance said "No deal" Brexit could cost the UK and the EU companies up to £58 billion.
• The ECB executive board member Benoit Coeure said he expects short-term interest rates at "very low levels" because the inflation rate in the Eurozone is below the ECB target.