Eurozone: Potential for the slowdown in growth to persist - Westpac

According to Tim Riddell, Research Analyst at Westpac, although there was an encouraging lift in both headline and core Eurozone July inflation, the sluggish Q2 GDP for the region suggests that activity failed to sustain the lift seen in May industrial production.

Key Quotes

“The outlook and commentary in last week’s Markit PMI also highlighted the muted outlook and potential for the slowdown in H1 2018 growth to persist. This has been a recurring theme given continued slide in ZEW expectations which provide a decent guide to activity over coming quarters.”

“The seasonal lull in political activity and lower market participation will mean that data and global risk sentiment are likely to impact EUR. Although leveraged (CFTC) positioning is back to around 68k contracts, this is close to the average since 2010.”

“ECB commentary will also be limited until the run into the Jackson Hole central bank conference, so EUR/USD is likely to remain pressured within a rough 1.12-1.19 range.”