Eurozone: Consumer confidence has recently diverged from sagging PMIs - Westpac

Tim Riddell, Research Analyst at Westpac, notes that the consumer confidence has recently diverged from sagging Eurozone PMIs, which have been dragged down by weakening core countries.

Key Quotes

“Although it is a secondary data release, Belgian consumer confidence slipped this month and could bode ill for regional consumer confidence.

Rebounds in Bund/US 2yr yield spread have been relatively minor and it remains within a widening (US higher) trend. The recent slippage in EUR/USD reflects a more positive slant towards prospects in US while the Eurozone remains at risk of recurring political and credit concerns.

Concerns over a potential shift in policy mix for Eurozone may resurface, but are unlikely to reduce the need for ECB to maintain its QE/APP into next year.

Eurozone and Switzerland are likely to maintain ZIRP and keep EUR and CHF weakening through their 12-month ranges against USD.”