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According to Richard Franulovich, Head of FX Strategy at Westpac, Eurozone Q2 GDP encouragingly revised up to 0.4% from 0.3%, pointing to stabilisation rather than ongoing deceleration, while the expectations sub-index of the German Aug ZEW showed a notable recovery, from six year lows of -24.7 last month to -13.7.

Key Quotes

“The recent “truce” in EU-US trade tensions may be already bearing fruit, though August prelim manufacturing PMIs due next week will provide a more definitive signal.”

“Despite that the ECB is unlikely to return from summer break (Sep 13) and declare that risks have abated; after all EM risks have been rising and US-China trade tensions remain a major potential flash point. Draghi should underscore the need for continued “ample degree of accommodation”.”

“Italian debt sustainability to return as a market focus in September too, the populist government to flesh out details of their contentious 2019 budget that will likely draw the ire of both ratings agencies and the EU.”

“EUR/USD trades poorly and likely continues to struggle amid the superior US growth and rate attractions.”