Euro area flash consumer confidence index falls slightly in May

The flash euro area consumer confidence index dropped slightly and missed expectations, but it remained highly elevated by historical standards in May. This implies that household consumption might continue to be on a growth path, noted Daiwa Capital Market Research. Indeed, the fall in the composite PMI still left it widely in line with the euro area’s second quarter economic growth forecast of 0.4 percent quarter-on-quarter, the same rate as in the first quarter.

But the ECB might be uneasy regarding the continued run of downside surprises in the data, all the more so as the PMIs implied that selling prices for goods and services rose at the slowest pace since September in spite of increased input costs.

“So, at its next meeting in June, we expect the Governing Council to refrain from making decisions on the future of its asset purchase programme. But, in July, assuming no marked deterioration in the economic outlook, we would still expect it to announce a gradual tapering of its QE programme throughout Q4, bringing the programme to an end in December”, stated Daiwa Capital Market Research.

At 21:00 GMT the FxWirePro's Hourly Strength Index of Euro was highly bearish at -106.26, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at 17.0656. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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