EUR/USD: Growth perspectives are not positive and could set the stage for further Euro weakness – NBF

Economists at the National Bank of Canada discuss EUR outlook. 

Narrowing in policy appears less likely

Tepid growth and waning inflation could be harbingers for an ECB staying its hand on restricting policy further. But real rates in the Eurozone remain largely accommodating and a still decent labour market combined with high inflation should keep the tightening schedule on track. 

The likelier scenario is that the Federal Reserve is facing data that is conducive to further rate hikes. As such, the narrowing in stance between both central banks has become less likely.

Growth perspectives for either economy in the latter portions of the year are not positive and could set the stage for further Euro weakness.