EUR flows: EUR edges lower on softer data

EUR/USD edging a little lower after somewhat weaker than expected German November retail sales data, although the underlying trend remains fairly flat. Nevertheless, the European data in general has been on the soft side and supports some shift towards lower ECB rate expectations and a lower EUR.

While EUR/USD will depend on global risk developments and this week’s US data, EUR weakness may be seen more clearly n the crosses, with EUR/AUD looking to have potential for further losses if risk appetite remains positive, while EUR/JPY remains a long way out of line with both yield spreads and traditional risk metrics. EUR/GBP may now be less vulnerable after recent declines, with UK data not supporting any persistent GBP strength.