Eurozone: Can survey data rebound be sustained and raise GDP? - Westpac

According to Tim Riddell, Research Analyst at Westpac, European politics and elections will be critical through 2017, but a near term hiatus in political events will focus market attention on Eurozone data.

Key Quotes

“End 2016 downgrades to official forecasts have been countered by stronger than expected Q4 data releases, notably Dec inflation and PMIs and Nov export and industrial production.”

“Export led improvements in data have coincided with a pause in EUR weakness and a widening of US-EU yield spreads. Data will be critical in determining EUR’s broader profiles. Any pullback in data will revert attention to forecasts for weak 2017 growth, political risks and the ECB’s extension of QE.”

“Swiss data has not improved in line with Eurozone. Deflation pressures remain. NIRP will keep CHF on a sliding track.”

“Data may be allowing for an interim base in EUR/USD and EUR/CHF, but political risk is likely to cap EUR before a break of 18-month extremes against USD.”