Market movers today
The preliminary German inflation data have not changed our view that euro-area HICP inflation released today will increase slightly to -0.1% y/y in March from -0.3% y/y in February mainly because of a less negative impact from energy prices. Yesterdays German inflation data also suggest that there will be no substantial distortions from the early Easter in 2015 that could have pushed some of the usual seasonal price increases in connection with Easter into late March. Hence, we have adjusted our forecast for core inflation slightly lower and now expect it to stay unchanged at 0.7% y/y in March.
Another important release today is euro-area unemployment, which we expect to have edged lower to 11.1% in February from 11.2% in January. In the US we expect Conference Boards consumer confidence to have been broadly unchanged in March. Strong employment growth continues to underpin consumer confidence but both higher gasoline prices and lower stock prices have weighed a bit on consumer confidence in March.
The deadline for reaching an agreement on limiting Irans nuclear programme in the current negotiations between the P5+1 countries (the five permanent members of UN Security Council + Germany) and Iran will officially expire today. It is possible that the deadline for reaching an agreement could be extended until after Easter. One of the major remaining issues is how fast the current UN sanctions against Iran will be phased out. This will be particularly important for the oil price. An agreement that opens up for fast elimination of UN sanctions and increased oil supply from Iran could put downward pressure on the oil price, whereas a breakdown in the negotiations will probably push the oil price higher.
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