Most surveys, especially confidence, and activity data continue to point towards strong Eurozone growth but, two key releases undershot expectations in the past week, points out Tim Riddell, Research Analyst at Westpac.
“Firstly, CPI once again failed to show any acceleration, despite surveys reporting both cost and wage pressures. The other miss was in retail sales. Although warm weather may have been an excuse, it highlights consumer activity during the festive period.”
“ZEW expectations surveys have failed to lift and may also reflect a reluctant consumer despite exuberance in current conditions.”
“Both ECB and SNB (also BoE) meet on 14th (FOMC 13th). Muted inflationary pressures in both EZ and Switzerland and the inability of Merkel to form a working coalition suggest that policy will be decidedly unchanged.”
“US tax reforms and budget development will be key drivers of EUR/USD.”
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