The euro is mixed today. The common currency is strengthening against the US dollar and the Japanese yen, while selling off against commodity currencies (including AUD and CAD) and the British pound. While the euro is typically a "risk-on" currency (the euro tends to strengthen as optimism for global growth accelerates), the currency has been remarkably stable in the face of falling growth expectations. Recent forward-looking economic indicators (such as IFO expectations and manufacturing PMIs) clearly suggest that the pace global growth is now decelerating in rate-of-change terms. While the euro would typically weaken in the face of a worsening outlook, the common currency is benefiting from weakness in the US dollar. As the likelihood of a global trade war rises, the US dollar has been weakening as a result. Indirectly, this has led to a stronger euro in relative terms. Our short-term outlook on the euro is neutral, while our medium-term outlook is bullish.
EUR/USD is up and trading above 1.2360. The euro is up against the yen, with EUR/JPY trading above 129.960. Finally, the euro is down slightly against the pound, with EUR/GBP above 0.8730.
Looking at economic data from the Eurozone this week, we'll see German inflation towards the end of the week. In a few hours, we'll hear a speech from German Bundesbank President Weidmann. On Tuesday, we'll see German import prices. We'll also get Eurozone sentiment data including economic sentiment, industrial confidence, services sentiment and consumer confidence for March. On Wednesday, we'll see German GfK consumer confidence. Thursday is the most important day, and we'll see the March consumer price index and the harmonized consumer price index for Germany. The consensus forecast is for YoY inflation to accelerate to 1.5%. Last week, ZEW, IFO and PMI sentiment figures indicated worsening sentiment.