Eurozone: Solid growth will continue in Q4 - Westpac

According to Tim Riddell, Research Analyst at Westpac, persistently strong surveys imply that Eurozone’s solid growth will continue in Q4, but ECB forecasts suggest that growth will ease in 2018. Therefore the ECB may well reiterate the need for continued accommodation given the lack of EU structural reforms, he further adds.

Key Quotes

“Markets are likely to focus upon both the timing and profile of ECB’s APP tapering (expected to start in early 2018, with a cautious and gradual reduction from current EUR60bn per month). This is mostly priced in, so the tone of ECB comments will be critical for markets.”

“Germany’s coalition is still to form, Austria’s far right Freedom Party is entering discussions over power sharing and continuing consternations in Catalonia keep uncomfortable populism to the fore in advance of Italian elections.”

“EUR/USD gains should be capped as a 1.15-1.20 range develops. Better Swiss data recently should see EUR/CHF capped by the prior official 1.20 “floor”.”