The inflation rate in Germany as measured by the consumer price index is expected to be 0.3% in March 2015 compared to the same month of preceding year. Based on the results available so far, the consumer prices are expected to increase by 0.5% on February 2015, which is line with market expectations.

It was quite eventful European part of the Tuesday's session with German Retail Sales, French Consumer Spending, German Unemployment Change and Eurozone CPI and Unemployment Rate data being released. When adjusted for calendar and seasonal variations, the February turnover in Germany was in real terms 0.5% and in nominal terms 0.2% smaller than in January 2015. Analysts were anticipating 0.9% decrease.Compared with the previous year, turnover in retail trade was in the first two months of 2015 in real terms 4.3% and in nominal terms 3.3% larger than in the corresponding period of the previous year.

In February 2015, household consumption expenditure on goods in France was broadly stable: +0.1% in volume, after +0.7% in January. However, analysts were forecasting 0.3% incline. The high vigour of spending on energy and other engineered goods was offset by a slight decline in the consumption of clothes and cars. 

Number of unemployed in Germany fell by 15,000, thus beating market predictions on decline by 10,000. This was the sixth consecutive month of decrease. Furthermore,German unemployment fell to an all-time low in March, fuelling optimism over the strength of the euro zone's largest economy, official data showed on Tuesday.

Euro area annual inflation is expected to be -0.1% in March 2015, up from -0.3% in February. Analysts were expecting 0.3% decrease. Looking at the main components of euro area inflation, services is expected to have the highest annual rate in March (1.0%, compared with 1.2% in February), followed by food, alcohol & tobacco (0.6%, compared with 0.5% in February), non-energy industrial goods (-0.1%, stable compared with February) and energy (-5.8%, compared with -7.9% in February).

Separate report on unemployment rate showed that it declined to 11.3%, from revised last month's rate of 11.4%. Analysts were anticipating fall to 11.2%. However, this is the lowest rate recorded in the euro area since May 2012. The EU28 unemployment rate was 9.8% in February 2015, down from 9.9% in January 2015 and from 10.5% in February 2014.

Wednesday brought Spanish and Italian Manufacturing PMI data. While analysts were predicting small decline to 54.0 Spanish Manufacturing PMI ticked up fractionally from 54.2 in the previous month to 54.3 in March, thereby signalling a further solid improvement in operating conditions. The health of the sector has now strengthened in each of the past 16 months.

Italian Manufacturing PMI read 53.3 in March, up from 51.9 in February. Smaller increase to 52.2 was anticipated. This latest reading was the highest since April 2014, with the index’s average over the opening quarter as a whole (51.7) its best since the second quarter of last year.

Next week markets will be looking at:

Spanish Unemployment Change (Monday 9:00)

Spanish Services PMI (Tuesday 9:15)

Italian Services PMI (Tuesday 9:45)

German Factory Orders (Wednesday 8:00)

Retail Sales (Wednesday 11:00)