Eurozone: Signs of activity picking up - Westpac

Recent Eurozone data failed to show signs of activity picking up and though EZ Q3 GDP was in line, it was decidedly low and Germany’s GDP actually missed expectations by -0.1%, explains Tim Riddell, Research Analyst at Westpac.

Key Quotes

“The ZEW EZ expectations continued to slide and, as noted last week, suggests that activity is unlikely to lift into 2019.”

“Italy’s coalition has defied EU requests to amend their budget proposals and so have resubmitted their deficit and growth profiles. The EU is likely to make a response by or before 21st November, but risks of a face-off and potential imposition of sanctions and fines could see further deterioration/widening in the BTP/Bund spread.”

“Rebounds in EUR/USD seem likely to be capped in the 1.1300-50 (prior support) area unless there is some form of compromise on the Italian budget. Brexit concerns are also likely to weigh on EUR and so risk a slide towards the 1.10-1.11 area.”