Eurozone: Still lots of uncertainty - Westpac

Eurozone activity and surveys have been driven by Germany as recent better than expected ind. prod. and ZEW surveys allowed EUR to rebound, according to Tim Riddell, Research Analyst at Westpac.

Key Quotes

“Periphery data has shown divergence and expectation surveys may be waning. The lack of “fresh” top tier data until the release of Nov PMIs means that the plethora of ECB and EU speakers over the next week (including Draghi at EU Banking Congress on 17th) will garner increased attention.”

“Asset markets and yield spreads will also gain closer focus. Notable widening of the 2yr Bobl/US note spread has, so far, had limited impact on a firm EUR.”

“A Merkel-led CDU/Green/FDP coalition is yet to form and talks are proving to be difficult. Thorny issues of immigration and the environment could surprise by weakening the “Jamaica” coalition.”

“ECB’s accommodative stance should cap EUR and US developments may be the main driver of EUR/USD.”