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Tim Riddell, analyst at Westpac, points out that the Eurozone data this week was dominated by weakness in Markit’s Sep PMIs.

Key Quotes

“In stark contrast to estimates for a minor rebound, Eurozone (EZ) PMIs slipped. The EZ composite PMI edged closer to contraction, at 50.4, while Germany’s fell into contraction. At 49.2 it is at its lowest level since Oct. 2012. Importantly, the service sector is now being impacted by the weakness in manufacturing and broader declines in new orders.”

“Although this month’s ZEW survey showed some reduced pessimism in expectations, they remain at levels last seen in 2012. Additionally, Germany’s IFO expectations have fallen to their worst levels since 2009. These surveys underscore the need for ECB to maintain their extreme forward guidance.”

“Draghi’s pleas to EU’s Parliament for fiscal stimulus appeared fruitless. EU fiscal responsibility rules remain in place and both Germany and Holland continue to aim for budget surpluses.”

“Without fiscal assistance, something ECB repeatedly call for in their policy statements, the ECB will remain the only effective source of support. This will weigh on EUR and cause EUR/USD to redefine the lows of its recent effective 1.09-1.12 range.”