While financial markets remain fixated on the outcome of the EU summit, European data continues to fall short. Yesterday’s new lows for Eurozone flash manufacturing PMI are worrying, particularly with once-booming Germany facing its first sub-50 reading since September 2009. Once tomorrow’s summit is out of the way, Europe’s growth deficit should come back into focus. With an ECB rate cut looking increasingly warranted, rate differentials point to EURUSD levels closer to 1.3000.
UBS Investment Bank