Eurozone data persistently display potential of a firmer recovery - Westpac

Tim Riddell, Research Analyst at Westpac, suggests that data persistently display potential of a firmer Eurozone recovery, despite the pessimistic outlook that underpinned the ECB’s extension of QE in early December ’16.

Key Quotes

“PMIs confirmed a 70-month high and reported increased pricing power as well as sighs of rising internal demand.”

“Extremist and populist movements are unlikely to gain any genuine power but will keep confidence suppressed.”

“However, if political risks rise into the coming elections, they could unsettle Europe’s fragile recovery. Therefore ECB is likely to maintain its accommodation.”

“Unless politics become very ugly, EUR weakness on the back of political concerns should be seen as a range trading opportunity to position for EUR rebounds.”