EUR likely to be contained within the lower bounds of its 12 month range - Westpac

Tim Riddell, Research Analyst at Westpac, suggests that the better Eurozone consumer confidence did presage an improvement in core and pan-Eurozone activity surveys, notably gains in IFO and PMIs and this appears to have provided a floor for the recently embattled EUR.

Key Quotes

“However, Oct CPI and initial Q3 GDP may show considerable headwinds and underscore the need to maintain ECB’s accommodation. The EU has also issued warnings to errant Eurozone states over their inability to adhere to budget commitments. The lack of any loosening of budgetary constraints highlights ECB’s monetary policy as the only feasible tool to support Eurozone growth.

Spain’s attempts to form a functioning government needs attention, as do the proposals for Monte dei Paschi’s capital raising plan.

The confluence of these influences should keep EUR contained within the lower bounds of its 12 month range.”