EUR flows: EUR soft despite stronger data

EUR/USD has started the morning on the soft side in spite of slightly stronger than expected French GDP and German retail sales data, and as expected French CPI. The 0.2% q/q gain in French GDP increases the likelihood that the Eurozone GDP data later will be at or above the 0.1% consensus, while the German retail sales data is mildly encouraging, although the volatility of the numbers on a month to month basis means the underlying trend remains fairly flat. But there remains little reason to expect any significant deviation from 1.07 with EUR/USD continuing to stick close to the level suggested by 2 year yield spreads.