Euro area data to confirm moderate activity and very low inflation

Euro area data this week should confirm the status quo, moderate activity and extremely low inflation. The IP is liekly to decline 0.5% m/m in August and final September CPI headline and core inflation to be confirmed at -0.1% y/y and 0.9% y/y, respectively. 

This combination of low inflation and inadequate economic activity is consistent with the view that an extension of the ECB's current QE programme will act as a catalyst for another push lower in EUR/USD. 

"While the EUR/USD forecasts are recently revised higher to reflect recent EUR resiliency, downside risks to euro area growth and inflation stemming from a slowing China make us confident in further EUR/USD depreciation towards 1.03 by year-end and below parity by Q2 2016", says Barclays.