Apr. 1, 2017 (Commerzbank AG) – Euro zone – boost from the East
Corporate sentiment in the euro zone has improved massively in recent months, probably due mainly to demand from Asia picking up again. The main thrust seems to be coming from China. Despite that country’s continuing structural problems, the boost from the East should continue for the time being, and thus prevent a marked drop in sentiment indicators. However, since high private-sector debt levels are still weighing on domestic demand in the euro zone, there is probably only limited upward scope for Ifo and other indicators.
Turkey: Stable lira is a sham
The Turkish lira has stabilized since the beginning of the year, but there is no reason to sound the all-clear for the lira. It has benefited from improved sentiment against emerging markets currencies of late which has driven other EM currencies markedly up.
Outlook for the week of 3 to 7 April 2017
- Economic data: Yet again, March will probably have seen no change in the US in the gap between the upbeat mood throughout the economy and no more than average hard data. The employment report should continue to trace a positive though not overwhelming development.
- Bond market: With speculation on early ECB rate hikes subsiding, Bunds look well underpinned going into next week.
- FX market: The sharp rise in EUR-USD should be over for now. Not only sentiment but hard data as well are arguing for downside potential.
- Equity market: US monetary indicators such as the strong M1 money growth and the relatively steep US$ yield curve indicate that the S&P 500 bull might run further.
- Commodity market: The price of Brent is unlikely to change much in the week ahead, distinctly above the 50 USD mark.