Delayed Jobs Report & US Inflation Set to Drive Rates.
Summary:
US Retail Sales (Tuesday): December's retail spending figures arrive ahead of the main events, offering insight into consumer resilience as 2025 closed out.
Delayed US Jobs Report (Wednesday): January's employment data, postponed by the recent government shutdown, finally releases on February 11. Markets will scrutinise whether hiring momentum improved from December's weak 50,000 gain.
US Inflation & Eurozone GDP (Thursday): January's Consumer Price Index data publishes alongside final Q4 GDP figures from the Eurozone, confirming the region's economic trajectory into year end.
A brief government shutdown has reshuffled the economic calendar, pushing January's US employment report to Wednesday and the inflation data to Thursday. This unusual sequence places two of the month's most important releases on consecutive days, concentrating Dollar volatility into a 24 hour window that will test the Federal Reserve's narrative of a resilient labour market.
Wednesday's employment report takes centre stage, delayed five days due to the shutdown that ended last Tuesday. Economists surveyed by FactSet anticipate 80,000 jobs were added in January, a modest improvement on December's 50,000 but still historically weak by any standard. The unemployment rate is forecast to hold at 4.4%. Private payrolls data released by ADP showed just 22,000 positions added in January, well below expectations and reinforcing concerns about labour market fragility.
For the US Dollar, Wednesday morning represents the week's critical juncture. A second consecutive soft payrolls print would intensify pressure on the Federal Reserve to accelerate rate cuts, typically weakening the currency. Conversely, a reading above 100,000 would ease recession concerns and likely support the Dollar, raising costs for those needing to purchase USD. The market remains divided on the outlook, with 2025 having averaged just 49,000 monthly job gains compared to 168,000 in 2024.
US inflation data follows closely behind. The January Consumer Price Index, also delayed by the shutdown, now releases on Thursday at 13:30 GMT rather than its original Tuesday slot. This timing places inflation figures after employment data, reversing the usual sequence. Markets will assess whether price pressures continue to ease or whether inflation remains stubbornly above the Federal Reserve's 2% target. The combination of Wednesday's jobs data and Thursday's inflation print will likely determine whether the Dollar strengthens or weakens through the remainder of February.
Both the Bank of England and European Central Bank held rates steady at their February meetings, though the decisions revealed underlying tensions. The BoE's 5 to 4 vote showed deep internal divisions, with four members favouring an immediate cut to 3.50%. Sterling fell sharply after the announcement as markets repriced their expectations for spring rate reductions. The ECB left its deposit rate at 2.00% but acknowledged rising uncertainty around trade policy and the Euro's continued strength through January.
The Eurozone closes Thursday with final Q4 GDP data. Preliminary estimates showed growth of 0.3% quarter on quarter, slightly above expectations and matching Q3's pace. Spain led with its strongest quarterly performance in a year, while Germany and Italy both exceeded forecasts at 0.3%. Full year 2025 growth reached 1.5%, surpassing the European Commission's 1.3% projection. For Euro positioning, the data is unlikely to spark major volatility given preliminary figures have already been absorbed, but any revisions would carry weight.
Sterling faces its next major test the following Monday when the ONS publishes its February labour market report covering the three months to November. UK job postings have fallen more than 25% below pre pandemic levels, and the unemployment rate has climbed to a joint four and a half year high. Wage growth, however, remains elevated at 4.5% for workers staying in their roles, complicating the Bank of England's decision making.
Events to Watch This Week:
Tuesday, February 10: US Retail Sales (13:30 GMT)
Wednesday, February 11: US Nonfarm Payrolls & Unemployment Rate (13:30 GMT)
Thursday, February 13: US Consumer Price Index (13:30 GMT) | Eurozone GDP Final (10:00 GMT)
Friday, February 14: No major scheduled releases
If you need guidance on currency transactions around Wednesday's employment release and Thursday's inflation data, contact our dealing team to discuss timing strategies for your specific transfer requirements.
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