Remarks on the euro via NatWest
In brief;
- Weak growth
- political tensions, most obviously around Italy, have chipped away at EUR valuations
Weak Euro area growth is arguably a bigger deal for Italy than France and Germany as it will lead to calls for fiscal policy to be eased and renewed confrontation with the European Commission
We maintain a structurally bearish EUR view
- Europe continues to suffer from exposure to the EM slowdown via multinational earnings, manufacturing and trade
We expect the next move from the ECB to be an ease in policy
- forward guidance being adjusted in March
- potential for TLTROs in June