European assets continue to offer 'safe, liquid alternative' to investors amid Trump volatility

Matthew Ryan, CFA Ebury

The PMIs of business activity for January were a slight disappointment. While they validated the narrative of a rebound in the German economy powered by the huge fiscal stimulus package of early 2025, a loss of momentum in the French economy more than made up for it and the headline number actually dropped modestly.

One positive factor is the sustained appreciation of the Chinese yuan, which will offer some relief to European industry competing against Chinese goods in international markets.

We still expect that the path of least resistance for the common currency will remain upwards against the dollar, as international investors continue to hedge their exposure to US assets by selling dollars.

It remains the case that European assets continue to offer a safe and liquid alternative to the greenback for investors seeking predictability and stability in government decision making, which should favour the euro so long as Trump remains in the White House.

Author

Matthew Ryan, CFA

Ebury

Matthew is Global Head of Market Strategy at FX specialist Ebury, where he has been part of the strategy team since 2014. He provides fundamental FX analysis for a wide range of G10 and emerging market currencies.

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