ANZ are expecting further deprecations for the euro in the second quarter of 2019
In brief:
- risks skewed towards EUR downside in coming months
- Both the Fed and European Central Bank (ECB) moderated forward guidance on interest rates last month, removing expectations that interest rates will rise this year.
- That has contributed to falling volatility, but we are unconvinced that this can last much longer.
- Euro area (EA) growth is in the doldrums
- lead indicators signal activity weakness into Q2
- credit growth is also losing momentum
- Investment and hiring are being restrained by geopolitical uncertainties such as: the European parliamentary elections in May and the rise of populist parties; and unresolved US trade talks, in particular the threat of US auto tariffs.
