ECB policy makers are worried about euro's strength - Scotiabank

Analysts at Scotiabank noted the recent data from the EZ and concerning levels in the euro for the ECB.

Key Quotes:

"Eurozone Aug CPI came in at a slightly firmer than expected 1.5% (1.4% estimated, 1.3% last) while the unemployment rate was steady at 9.1% for Jul."

"German retail sales and unemployment data were slightly disappointing."

"Reuters reported that the strong EUR is worrying a “growing number of ECB policy makers” – which suggests perhaps some “psychological” resistance developing around the 1.20 level."

"Short and longer term spreads are little changed from recent ranges which means EUR/USD remains well over-valued (1 standard deviation) from our fundamental fair value estimate (currently 1.1284)."