US payrolls report (Fri) will be the key focus. Indeed the Fed's assertion that it wants to see further labour market "improvement" before it raises interest rates emphasises its importance.
In contrast to most other February US data, the payrolls report was strong, rising by more than 200K for the 11th successive month. This was possibly because the survey date was in the first half of the month before the worst of the cold weather hit the north east.
Weekly unemployment claims indicate that the labour market may have weakened in the second half of February but reports for early March suggest that this was short lived.
"We forecast another big gain in payrolls in March of 245k, close to the consensus estimate, along with the unemployment rate unchanged at its current low of 5.5%. Just as interesting for markets will be the pace of earnings growth. This fell modestly in February after accelerating in January. We expect to see a rebound.
While some FOMC members have indicated that they won't necessarily wait for evidence that wage growth is picking up before raising interest rates, an acceleration would help meet the Fed's other tightening trigger, that they can be reasonably confident inflation will return to target. Amongst the other data, the manufacturing ISM will be watched for further signs of a negative impact from the strong dollar." - said Lloyds Bank in a report on Friday
