Sleeping giant awakens? Downside risks for euro grow

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A drop in the euro/dollar exchange rate to a four-month low raises the prospect of a repricing of one of the world’s most important macro-economic metrics and a potential re-rating of the U.S. currency across the globe.After settling into the narrowest trading range in the euro’s two-decade history in 2019, the euro’s latest drop in the past week raises concern about a broader decline.

The U.S. economy is outperforming its European counterpart while the impact of the coronavirus on the Chinese economy and consequently the German economy, Europe’s powerhouse, has yet to show up in data.

Citigroup’s economic surprise index for Europe has slumped to a four-month low while a similar gauge for United States has jumped to a five-month high after dismal German industrial data and strong U.S. jobs figures last week.

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