SocGen thoughts today
Kit Juckes from SocGen highlights what's driving the euro and points to GDP prints this week from France, Spain and the eurozone as a whole as drivers. The consensus is for Eurozone GDP to rise 0.3% q/q tomorrow:
Why do I think that an upside surprise in GDP growth would be enough to give the euro a lift? Because EUR/USD has stopped tracking relative rates or yields, nominal or real, short or long and instead, is tracking growth expectations. 2017 saw a big improvement in growth expectations that convinced the ECB to pre-announce policy normalisation. In part because the euro rise sharply (particularly in trade weighted terms), the last year and a bit have seen a huge downgrade in growth expectations that has dragged the currency with it. That growth rethink has gone far enough, perhaps too far.
Here is the euro weekly chart:
