EUR: Rekindling its summer love affair with a resurgent EZ economy - ING
EUR markets have rekindled their summer love affair with the story of a cyclical upswing in the Eurozone, with EUR/USD moving back towards 1.18 yesterday – a level that ING see as more appropriate, explains Viraj Patel, Research Analyst at ING.
“It’s no real surprise to us, political noise – and a potential slowdown in the Merkel-Macron European project – might have dampened the strong EZ equity portfolio inflows seen over 2017 (we’ll know for sure in the balance of payments data release later this week). But the robust EZ activity data suggests that the underlying ‘animal spirits’ in the economy remain, which in turn could drive EUR/USD towards the 1.20 level heading into year-end.”
“It’s a slight understatement to say that the Scandi FX are ‘underperforming’, with SEK leading the way, having lost more than 1.7% against the EUR. While one is able to point to a multitude of catalysts – not least weaker Swedish CPI data and falling house prices – the nature of the krona’s fall from grace is baffling. Tail risk EUR/SEK breaches 10.00 with Riksbank speakers and jobless data still to come.”