Germany's IFO index is expected to slow in March

The European futures market is pointing to a mixed open Friday, ending the week cautiously as British retail sales unexpectedly fell in February, with online shopping returning to pre-pandemic levels and the stormy weather deterring some shoppers from venturing out. As part of today's events, attention is likely to be focused on the latest German economy IFO survey, the EU leaders' summit and US housing market data amid bankers' speeches from the Federal Reserve.

UK retail sales surprisingly dropped

Even though demand seems to be improving in the UK, the retail sector still faces significant challenges in the months ahead due to rising prices and decreases in disposable income.

Sales volumes were down by 0.3% from January, data from the Office for National Statistics showed.

Excluding gasoline, which rose in price in February due to tensions between Russia and Ukraine, sales fell by 0.7%. Household goods stores saw sales drop by 2.5%, and some retailers believe stormy weather last month affected foot traffic.

As inflation increases from levels that are already the highest in 30 years, retailers fear the second half of the year will be even more difficult. According to Reuters, the budget watchdog expects the consumer price index, which was 6.2% in February, to go close to 9%.

Germany business activity expected to fall

A key indicator of economic strength in the Eurozone's largest economy, the German Ifo business climate index, will be released later in the session. Despite two consecutive months of rising figures, the index is expected to decline in March from 98.9 to 94.2. 

Ifo Institute, which lowered its German economic growth forecast from 3.7% to 2.2%-3.1% earlier this week, will likely announce a decline in business confidence. The Expectations Index is expected to drop from 99.2 to 92 in March, and the Current Assessment Index is forecast to drop to 96.5 from 98.6. The euro could suffer further selling pressure if these data come in lower than expected.

Fed's speakers on 50 bp rate hikes

A speech will be delivered later in the day by New York Fed President John Williams and Fed Governor Christopher Waller. Several FOMC policymakers have indicated their willingness to consider a rate hike of 50 basis points in upcoming meetings. The dollar should hold its ground against its major rivals unless the Fed turns dovish.