We believe our economics team’s call for a 4.4%-4.5% year-on-year read is moderately lower than expectations. This wage indicator has been on a steady rise since mid-2022, and a decline, even if contained, should be welcomed by the ECB. It will be up to the 2024 first quarter GDP print (which includes detailed wage information) in April and the negotiated wage indicator in May to greenlight or redlight a rate cut in June, given the second quarter GDP figures are published after the June meeting.

The Euro is an outlier in the G10 space, being moderately overbought (+7% of open interest) against the Dollar despite its widely negative rate differential. Watch for some positioning adjustment on the downside today in EUR/USD, should the ECB wage growth come in below 4.5%. Still, we would not be surprised to see good support at 1.0700.