EUR flows: EUR boosted by stronger German services PMI, but...

The EUR has benefitted from a much stronger than expected German services PMI, which can be expected to give the Eurozone PMI a lift, even though the French services PMI was weaker than expected.  However, there still seems little chance of any change in ECB policy, and the concerns in Europe revolve around fiscal problems in France and some of the other weaker countries, so divergent strength in Germany won’t necessarily be supportive, as it limits the scope for ECB easing to support the weaker economies.  EUR/USD strength should consequently be quite limited here, with little scope beyond the mid-1.16s, at least ahead of the US CPI data later.