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Eurozone still in doldrums

Eurozone PMIs yesterday did little to enthuse investors and a number of concerns over the outlook from both a macro and corporate perspective caused a big sell off in risk assets. Even the likes of the commodity currencies were affected with AUDUSD continuing its downward trend hitting a new seven month low around 0.8830 but this morning it has seen a little bounce so far to 0.8885.

Today the focus will be on the Eurozone again as we get IFO data from Germany which in the last four months has declined and is expected to record the fifth monthly fall in a row. Business sentiment is due to fall from 106.3 to 105.7 with anything lower than expectations likely to get further calls for more concerted action from the ECB. We don’t get anything from the ECB until next Thursday’s rate decision and policy statement where investors will want to hear full details of their latest asset purchase program and most importantly how they see it will prevent the current state of disinflation. Continued sluggish economic data from the Eurozone is only likely to keep the pressure on EURUSD which this morning is trading at 1.2850.

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