Tim Riddell, Research Analyst at Westpac, suggests that Eurozone’s inflation data and comments from ECB members may remain of high interest, but the lack of other key data during the coming week means that the Trump-initiated focus on Eurozone’s trade surplus with US is likely to be the key focus.
“It is far from clear that there is a persistent relationship between EUR/USD and the steady rise in the region’s surplus since EUR was initiated. What is far more important is the impact of any trade dispute on sentiment and the ECB.”
“Recently data has been beating estimates, implying that the extent of the slowdown in 2018 was abating. However, the sharp fall in the latest ZEW expectations suggests further sluggish Eurozone growth in H2 18.”
“Rising political tension within Eurozone and with US reduces the scope for structural reforms and so is likely to maintain ECB’s forward guidance. EUR rebounds should struggle towards the upper end of its possible 1.12-1.19 range.”