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EUR: Whatever happened to… growth? – ING

“US data this week sees inflation and retail sales for October. Core inflation is expected to remain at 2.2% YoY and surveys suggest retail sales are set to stay strong,” not ING analysts.

Key quotes

We’ll also hear from a variety of Fed speakers, including Chair Powell. So far the mid-term results have done little to dent US growth optimism and the market will be keen to hear whether there is scope for bipartisan fiscal stimulus after all. Firm US rates should keep the dollar bid versus the low yielders.”

“The Eurozone story remains challenged, however. The week ahead will see the second reading of Eurozone 3Q18 GDP, which disappointed at 0.2% QoQ. We’ll also see the first reading of German growth, which some are expecting to have contracted. This is a far cry from the temporary slow-down story muted in the first half of 2018. We’ll also get the next instalment of the Italian budgetary story.”

“Having been sent back to the drawing board by the European Commission, there are no signs that the Italian government is yet ready to compromise on its spending plans. While this discord may just about be priced into the BTP:Bund spread, it still leaves EUR/USD vulnerable.  A break down to new lows for the year to levels just below 1.12 look possible this week.”

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