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

ECB is likely to focus increasingly on the economy

“The purchasing managers' indices from the euro zone at the beginning of the week and the German Ifo index yesterday briefly reminded the market that risks are also lurking in the euro zone. And these are significant economic risks.”

“The market does not really want to see them at the moment and is pushing them aside since the Fed and the dollar tend to overshadow everything. Nevertheless, they cannot be ignored, especially if the next leading indicators are similarly gloomy and the hard facts should deteriorate.”

“For the euro, too, it is now more appropriate to look at the economy rather than inflation. After all, the ECB is likely to focus increasingly on the economy as well, especially the doves of the Governing Council. Although the euro has weathered the bad data well this week, little strokes fell big oaks. That is why I will keep a close eye on data from the euro area in the coming weeks.”