Euro area data to confirm moderate activity and very low inflation

Euro area data this week should confirm the status quo - moderate activity and extremely low inflation. IP (Wednesday) is expected to decline 0.5% m/m in August (consensus: -0.5%) and final September CPI headline and core inflation (Friday) to be confirmed at -0.1% y/y and 0.9% y/y, respectively (in line with the consensus forecast). This combination of low inflation and inadequate economic activity is consistent with the view that an extension of the ECB's current QE programme will act as a catalyst for another push lower in EURUSD. 

"We recently revised higher our EURUSD forecasts to reflect recent EUR resiliency, downside risks to euro area growth and inflation stemming from a slowing China make us confident in further EURUSD depreciation towards 1.03 by year-end and below parity by Q2 2016", says Barclays.