EUR: Activity and inflation data to confirm subdued demand conditions

Euro area data this week are likely to be consistent with a large degree of spare economic capacity, supporting continued aggressive ECB QE and the bearish EUR view. 

"We maintain high conviction in further EURUSD downside in the context of steadily improving US data and a likely September Fed rate hike that remains under-priced," notes Barclays.

This week, euro area IP is expected to contract 0.5% m/m in June (Wednesday; consensus: +0.1%) and Q2 "flash" GDP to remain low at 0.4% q/q (Friday; consensus: 0.4%). Also Friday, final July headline and core HICP inflation should be confirmed at +0.2% y/y and +1.0% y/y, respectively, in line with the consensus forecast.

The ECB July meeting minutes will be published on Thursday, but additional information and market reaction to these have been limited since their inception. Any mention of Greece, however, will likely be noted, given the upcoming 20 August EUR3.2bn payment due to the ECB that will likely require further bridge-funding to deliver.