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