What to watch

It's a busy day for markets today with the US employment report the highlight but we are due to receive Eurozone inflation data later this morning. We have already seen both French and German IP and trade numbers disappoint consensus expectations this morning.

• We have seen the Eurodollar strip grind a little higher overnight, but it still remains below it's pre-Minutes levels with around a 70-75% probability of a March hike priced into markets at present.
• For payrolls there is a wide range of analyst estimates with the majority in a 300-600k range while hourly earnings will also be watched closely. There is likely to be two-way risks to markets from today's print. A higher number is likely to push more emphasis on upcoming inflation prints and increase the probability of a March hike. However, a soft report would be unlikely to completely derail a March hike, but would introduce more two-way risk.
• After payrolls we have the Fed's Daly due to discuss monpol (we also have Bostic speaking but not on monpol and BOE's Mann but not on UK-related matters).
• In terms of the Eurozone HICP print at 10:00GMT, risks seem skewed to a slightly higher print after the national prints over the past few days. We note that 5y5y inflation swaps have come off their highs over the past few days (after peaking over 2.12% intraday on Tuesday) and currently sit at 1.86% at writing. EGBs seems more vulnerable to upside surprises at present.