LOOK AHEAD: Friday Data Calendar: February Employ Report, Fed Speakers

• Today’s data for the central government cash balance saw a budget deficit of E156.3bn in 2024 or 5.4% GDP, an improvement from the E173.3bn or 6.1% GDP in 2023 on the same cash and central government basis.
• Whilst it’s not directly compatible to national accounts basis figures used in the budget, it points to a greater directional improvement compared to the 5.4% GDP forecast for the central and state government deficit in 2024 in the October draft budgetary plan after the realized 5.6% GDP in 2023.
• This was part of the draft plan that saw a general government (i.e. incl local governments and social security) deficit of 6.1% GDP in 2024 after 5.5% GDP in 2023.
• This draft budgetary plan had pencilled in a general government deficit of 5.0% GDP in 2025 although this has since of course been lifted to a target of 5.4% GDP by the new Bayrou government having been forced through parliament without a vote on Monday. [See our political risk team’s post at 1653GMT on the fallout from this approach: Gov't To Survive 5 Feb Votes; Censure Motion Next Week Greater Threat].

• Back to the details in today’s central government cash data, the bulk of the improvement on the year came from total expenditure falling to E511.1bln vs E522.7bln in 2023.
• Total revenues also modestly increased to E357.2bn in 2024 vs E354.5bn in 2023, helped by “other tax revenues” at E67.5bn vs E65.5bn in 2023.
• The press release notes the increase in other tax revenues was "mainly due to the growth in other domestic taxes [+E2.0bln] and the solidarity levy [+E0.8bln]" though these were partially offset by a "slight decrease in net IR revenues [-E0.6bln] and the state share of net TICPE (internal consumption tax on energy products) [-E0.8bln]".
• Non-tax revenues fell to E23.2bn vs E25.1bn in 2023, mainly because of an EU RRF payment.
• Finally, special accounts recorded a deficit of E2.35bn vs the E5.1bn in 2023. 

• RES 4: 1.0533 High Jan 27 and a key resistance   
• RES 3: 1.0446 50-day EMA
• RES 2: 1.0387 20-day EMA 
• RES 1: 1.0386 High Feb 3
• PRICE: 1.0379 @ 16:36 GMT Feb 4 
• SUP 1: 1.0221 61.8% retracement of the Jan 3 low-high range
• SUP 2: 1.0138 1.764 proj of the Sep 25 - Oct 23 - Nov 5 price swing
• SUP 3: 1.0031 2.00 proj of the Sep 25 - Oct 23 - Nov 5 price swing 
• SUP 4: 0.9947 76.4% of the Sep 28 ‘22 - Jul 18’23 bull leg 

EURUSD recovered further from the Monday low, however, for now, gains are considered corrective as the 20-day EMA capped the recovery. Monday’s fresh cycle low, highlights a resumption of the downtrend. Moving average studies are in a bear-mode position and attention is on 1.0138, the 1.764 projection of the Sep 25 - Oct 23 - Nov 5 price swing. Clearance of this level would open 1.0031, the 2.00 projection. 

• The Washington Post (in full here) writes that federal government layoffs are likely if too few choose to quit.
• “Workers have until Thursday to decide whether to take an offer to resign now and be paid through the end of September.”
• A reminder that public sector payrolls growth has been providing an outsized impact on total nonfarm payrolls growth for some time, although that has been coming from the much larger state and especially local government sectors. There are around 3.0m federal employees, 5.5m state and almost 15m local.
• As such, whilst overall government job creation averaged a monthly 32k in Q4 for close to double the 18k averaged in 2019 and treble the 9k averaged through 2017-18, federal-specific job creation has averaged 3k in Q4 for no discernible change from the 2k in 2019.
• Quit rates are much lower in the public sector than the private sector, at 0.8% as of today's report for Dec (and just 0.4% specifically for federal workers) compared to 2.2% for private, suggesting layoffs could be likely.