The European Central Bank on Thursday will resist calls to start tightening policy against surging inflation but robust U.S. jobs data on Friday could seal the case for another Federal Reserve hike the week after.
So, let's say minus 0.4 percent rates in Europe and more than 0.75 percent in Washington.
With just weeks to go before contentious French and Dutch elections, the ECB will be keen not to rock the boat, so it is likely to give just a token nod to robust growth figures, steering clear of any policy hint that may give emerging populist movements ammunition.
Still, ECB President Mario Draghi will probably avoid any discussion about winding down asset buys, even pushing back on calls by some rate setters to tweak the ECB's guidance, giving up its reference to further rate cuts, a possibility markets have already priced out.
Having tightened policy in 2011 just months before the euro zone debt crisis started spiraling out of control, the ECB will be desperate not to move too early, even if it risks being called out by some for moving too late.
U.S. JOBS
The Fed, meanwhile, must deal with what Draghi dubbed a high-class problem: solid growth, full employment and returning inflation.
Non-farm payrolls, due on Friday, are expected to show an increase of 186,000 jobs, probably enough to push the Fed to move. Unemployment benefits already fell to near a 44-year low late last month, indicating further tightening of the labor market.
Indeed, markets FEDWATCH have now almost fully priced in a hike in March, the third since rates bottomed out at the height of the crisis, and two more increases could still come before the end of the year.
Reference: Reuters
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