– JPY underperforms, Asian equities mixed
– A decline in the German IFO is likely to weigh on the euro
– Further improvement in US activities likely supportive of USD rally
What to watch for today
EUR: IFO focus. Our economists forecast the German IFO declined to 108.9 in March from the seven-month highs of 109.6 in February. This would be below the Bloomberg consensus for an unchanged read, but would leave the index at high levels and probably come as a relief after last week’s weak PMI data. A more meaningful retreat could add to pressure on currencies geared to European growth, including the CE3 and Nordic currencies.
ILS: On hold. Our economist expects the Bank of Israel to keep rates on hold in line with the consensus forecast and rates market pricing. Given slowing growth and inflation below target, the bank should retain its dovish bias and our economist forecasts one more 25bp cut in the next few months. Recent weak Israel data keep us cyclically bearish on the ILS and we expect geopolitical risk to continue to weigh on the currency.
Click here to read the full report: European FX Daily
Credit Suisse
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