• External demand is weak and higher borrowing costs are dampening investments
• Consumers remain cautious on spending activity
• Inflation could slow noticeably at the start of the year, primarily on base effects

The stagnation and negative growth in the euro area economy continues into this year as any major recovery in growth conditions remain elusive. Germany might not be the sick man of the bloc now but it remains uninspiring at best. And the overall economic situation sure doesn’t look too promising to start the new year.

This article was written by Justin Low at www.forexlive.com.

The dollar is trading more mixed now in European morning trade, with yields sitting lower and equities posting a decent recovery off earlier lows. Of note, US futures have pared some of the heavier losses with S&P 500 futures now down just 0.2%.

Tech shares are still leading the downside, with Nasdaq futures down 0.5%. But that at least is less painful than the losses to start the session. The drag in tech comes from Intel’s softer guidance for Q1 this year, despite Q4 results beating estimates.

If anything else, do keep a watchful eye on the rates market as that could have implications for broader sentiment. And that includes a spillover impact on the equities space. The US PCE price report will be the main event later in the day and that should have some impact on rates, depending on the data.

This article was written by Justin Low at www.forexlive.com.