Significant economic risks are in the markets – Commerzbank

Risks are lurking in the eurozone and now it is more appropriate to look at the economy than inflation, notes Antje Praefcke, FX analyst at Commerzbank.

The ECB is likely to focus more and more on the economy

“Eurozone purchasing managers’ indices from earlier in the week and the German Ifo index yesterday briefly reminded the market that risks lurk in the eurozone as well. And these are significant economic risks.”

“The market doesn’t really want to see them right now and is pushing them aside because the Fed and the dollar tend to overshadow everything. However, they cannot be ignored, especially if the next leading indicators are equally bleak and the hard facts should deteriorate.”

“And for the euro, it is now more appropriate to look at the economy than at inflation. After all, the ECB is likely to focus more and more on the economy as well, especially on the doves of the Governing Council. Although the euro weathered the bad data well this week, small blows fell. I will therefore be watching the euro zone data closely in the coming weeks.”