Stay informed with free updates

Simply sign up to the Foreign exchange myFT Digest — delivered directly to your inbox.

Economists expect 57,000 non-farm jobs to be added to US payrolls in February, a sharp fall from the 130,000 added in January.

But forecasters have repeatedly been caught off guard by the headline figures, given that the Bureau of Labor Statistics has been making technical adjustments to its series. January’s figure was twice what economists had expected.

“The question this month is whether [January] was a flash in the pan or a first sign of a genuine pick-up in hiring,” economists at Investec said in a note previewing February’s numbers.

The figures due on Friday will be watched especially closely by the Federal Reserve ahead of its next decision on interest rates on March 18. Sticky inflation was a key concern for the central bank for much of last year; employment has more recently become a worry.

Economists warn that, despite the positive headline figures, weakness in hiring and job openings in recent months will eventually show up in overall employment, potentially strengthening the case for a cut in interest rates. This looks unlikely this month — trading on futures markets suggests a 94 per cent probability of no change, with two 0.25 percentage points cuts priced in by the end of this year.

Nevertheless, Oliver Allen of Pantheon Macroeconomics said weakness in the labour market “leaves room for payroll growth to continue to undershoot the economy’s ‘break-even’ pace, putting renewed upward pressure on the unemployment rate”. Zehra Munir

Can China internationalise the renminbi without opening its capital account? 

China’s interest in securing a bigger international role for its currency has attracted greater attention as a result of President Donald Trump’s fractious policies shaking confidence in the US-led world order. 

Beijing’s efforts have long come up against the maxim that it is possible for a country to have two but not three of the following: independent monetary policy, managed exchange rates and free movement of capital. 

China has chosen the first two, while the US has the first and third. 

While China’s capital account remains closed, the renminbi’s appeal as a reserve currency will be limited. According to the IMF, it makes up barely 2 per cent of official foreign exchange reserves globally.

But Adam Wolfe, emerging markets economist at Absolute Strategy Research, notes that China has had more success promoting the renminbi in trade finance. 

At the end of January the Chinese Communist Party’s flagship ideological journal published comments by President Xi Jinping calling for the country to build a “powerful currency” that could be “widely used in international trade, investment and foreign exchange markets, and attain reserve currency status”. Xi first made the comments in a closed speech to regional officials in 2024.

Wolfe said that since Xi’s speech, “Chinese banks have ramped up their cross-border renminbi lending, most of which has been trade finance . . . In effect, they’ve lent renminbi to foreign firms to pay for imports from China.”

The country’s central bank moved on Friday to slow the recent rapid appreciation of the renminbi, which has threatened China’s export competitiveness.

The focus on trade, said Jason Pang, senior portfolio manager and Asia local rates and foreign exchange lead at JPMorgan Asset Management, has led to “an increased adoption of the renminbi without the need to open the capital account”.

Still, there are limits to the extent to which this can happen. 

“As long as capital controls exist, the role of the renminbi is more as a regional trading currency rather than a global reserve currency,” said Zouhoure Bousbih, emerging markets strategist at Ostrum Asset Management. William Sandlund

Could Eurozone inflation shift the ECB from its ‘good place’?

ECB president Christine Lagarde has repeatedly described Eurozone inflation and interest rate policy as “in a good place”.

February’s Eurozone inflation figures will provide the latest test of that mantra when they are published on Tuesday.

Economists polled by Reuters expect headline annual inflation of 1.7 per cent, the same level as in January, undershooting the central bank’s 2 per cent target. They expect core inflation — which excludes volatile food and energy prices — to remain steady at 2.2 per cent, the lowest level since 2021.

Services inflation — a measure of domestic price pressures — has proved more sticky, falling in January but still above 3 per cent, as it has been for more than two years.

“If services disappoint again, this will be a challenge to the ECB’s current narrative that they are in a good place,” said Tomasz Wieladek, chief European economist at T Rowe Price. “The bar for cuts will definitely come lower if there is a disappointing services print.”

The ECB has held its policy interest rate at 2 per cent at its past five meetings. Traders expect it to continue doing so, pricing in just a one-third chance of one quarter-point cut by the end of this year, according to levels implied by swaps markets. Rachel Rees