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Uptrend in Eurozone PMIs unlikely to boost Euro – SocGen

Kit Juckes, Chief Currency Strategist at Societe Generaleanalyzes the outlook for currency markets following the release of preliminary February PMI indices from around the world.

The Euro cannot ignore Germany

The Eurozone is slowly recovering, but it is doing so without Germany and the Euro cannot ignore Germany. Therefore, the upward trend in Eurozone PMIs is unlikely to boost the currency. NOK and SEK, or PLN, are a better buy than the EUR. AUD is a buy against anywhere in Europe as Chinese stimulus starts to take effect.

The Pound is likely to remain resilient for several more months as the Bank of England continues to pursue looser monetary policy, despite growing long-term structural threats to growth (and the Pound).

If the US January ISM data is also strong, there is a danger that USD/JPY will reach 155.00 before it also turns lower. A shift in Bank of Japan policy won't come quickly enough for Yen bulls, and the March meeting seems very far away at the moment.

Source: Fx Street

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