Improving economic conditions just around the corner for euro

23rd April 2015 By: Ranko Berich

Euro Outlook – 23/04/15

Wednesday will be a big day for the euro, with German inflation data and M3 money supply due to be released in the morning. Recent euro data has been encouraging and nothing will be a better judge of the success of the ECB’s quantitative easing programme than these two statistics.

Germany remains the eurozone’s cornerstone economy and if upwards pressure on prices is going to materialise anywhere, it will be here. Fuel prices will of course drive down headline inflation, but if prices pick up elsewhere this could be a positive sign that the ECB’s loose monetary policy is finally beginning to have some effect on inflation. It’s too early to attribute any increase in inflation to quantitative easing, but at this stage any improvement will be taken as a victory by markets.

M3 Money Supply figures have also been showing improvement in the critical area of lending. This could be the month when lending growth finally reaches positive year-on-year growth, signposting the turning of the eurozone’s credit cycle and the promise of improved economic conditions just around the corner.