Market themes of the Day: German growth set to stagnate in Q4 as business climate deteriorates

What you need to know before markets open
Main themes: 

• The Eurozone services improved, but manufacturing in Germany deteriorated further in February as PMI fell to a 74-month low of 47.6.
• The ECB minutes of the January meeting confirmed the ECB's increasing concerns regarding the economic slowdown. The confidence indicators though might prevent the central bank from twitching at the March meeting.
• The Bank of Japan Governor Kuroda confirmed the outlook for the global economy to continue to grow with some risks to economic outlook including trade protectionism.
• The Reserve Bank of New Zealand deputy governor Bascand said the Bank plans to raise the capital requirements for commercial banks that would eventually lead to a rate cut. The news saw NZD fall some 0.5% to mid 0.6700s.
• The US durable goods orders rose less than expected by 1.2% m/m in December with core durables ex-transportation up 0.1% m/m. Autos and airplanes boosted durables in December, but the non-defense durables ex airplanes were down -0,7% m/m, weighing on the US Dollar.  
• The German Ifo business climate indicator headline in Europe while the New York Federal Reserve’s Monetary Policy Forum hosting many Fed officials highlights the US market session.

Europe

• German harmonized inflation remained stable at 1.7% y/y. 
• German manufacturing PMI fell to a 74-month low of 47.6 in February while services PMI rose strongly to 55.1. The services sector masks the manufacturing falling deeply into the contraction territory. 
• The Eurozone manufacturing fell into contraction territory in February as PMI fell to 49.
• German GDP is expected to stagnate over the quarter while decelerating to 0.6% over the year in the final quarter of 2018.
• German Ifo business climate indicator is expected to decelerate to 99.0 in February, confirming the general trend of economic slowdown and weighing on EUR.
• The Eurozone inflation is expected to remain stable at 1.4% y/y in January with core inflation at 1.0% y/y.
• The ECB President Mario Draghi is scheduled to address audience while awarded an honorary doctorate from the University of Bologna. 

US

• The US initial jobless claims reached 216K in the week ending February 16.
• The US durable goods orders rose less than expected by 1.2% m/m in December with core durables ex-transportation up 0.1% m/m. Autos and airplanes boosted durables in December, but the non-defense durables ex airplanes were down -0,7% m/m, weighing on the US Dollar. 
• The Philadelphia Fed manufacturing index fell -4.1 in February, way above expectations and added to the picture of the US economy slowing down.
• The New York Federal Reserve Bank is organizing the US Monetary Policy Forum, in New York with Fed officials including New York ed President Williams, Fed Vice Chairman Clarida, St. Louis Fed President James Bullard and Fed Governor Randal Quarles speaking.

Canada

• The Bank of Canada governor Stephen Poloz’ s speech on monetary policy offered little insight into the outlook, focusing on high-level limitations of the Bank's current policy framework.
• The ADP private employment report for Canada saw 35.4K new jobs added in January, up from -13.0K in December.
• Canada’s retail sales are expected to fall -0.3% m/m in December with core retail sales also down -0.3% m/m.