Eurozone: Larger than expected decline in industrial production – BBH

Several national reports had warned of downside risks to Eurozone aggregate industrial production, but the 0.8% decline was considerably larger than expected, according to analysts at BBH.  

Key Quotes

“It was only partly blunted by a revision to the January data that saw the initial -1.0% decline revised to -0.6%.  February was the third consecutive monthly decline, the longest decline since 2009.  We suspect poor weather weighed on the regional economy in Q1, but it appears that the economic cycle has peaked.  The implication is that the economy is likely to strengthen in Q2 as the weather effect passes, but is unlikely to return to the level of activity seen in the second half of 2017.”

“The euro remains range-bound against the dollar.  It has been in a two-cent range between $1.22 and $1.24 this month.  It approached $1.24 yesterday but has been pushed back to $1.2330 following the disappointing industrial output figures.  The euro has entered a range that houses three options strikes that expire today.  The strikes are $1.23, $1.2325, and $1.2345 and the notional amounts are 535 mln euros, 667 mln euros, and 803 mln euros respectively.”