Eurozone: Downward pressure on growth - Westpac

According to Tim Riddell, senior markets strategist at Westpac, hopes are fading for German activity to rebound from the negative impacts of the diesel and regulatory hit to the auto sector.

Key Quotes

“Survey data has been weak for Germany (manufacturing PMI slipping into contraction and no rebound in ZEW Eurozone expectations) and the leading aspect of foreign and capital goods orders have faltered again this week.”

“EC forecasts are set to be downgraded, in line with recent national government and central bank downgrades, but will also increase tensions over the fraught budget proposals from France and Italy.”

“The ECB has downplayed the potential of adding liquidity through LTROs but has highlighted the importance of the ECB’s March meeting and so as data pressures persist, speculation of an easing of policy will mount.”

“EUR/USD has duly faltered on attempts to push above 1.15 and bias remains for another slide towards range support in the 1.12s.”