EUR flows: EUR has some downside risks as confidence slips

Another quiet calendar on Wednesday is likely to mean most ranges remain intact, although the USD is a little firmer overnight with the market losing a little interest in the Lisa Cook story. This morning’s Gfk German consumer climate index has come in a little weaker than expected, following a similarly slightly weaker French number yesterday. The levels are still not of major concern, although the French situation is becoming more concerning, especially with the Prime Minister expected to announce budget measures next month but likely to fail to get them through parliament. The EUR may consequently have some downside risks, especially since EUR/USD remains well above levels normally consistent with yield spreads.