February’s Euro Zone Current Account report is expected to show a -10.7 billion euro deficit, a narrower shortfall than the previous month’s -12.7 billion result. Setting aside month-to-month volatility, the expected result would amount to a -18.8 billion euro annual drop in trading terms as compared to a -6.5 billion decline in the year to January. Meanwhile, the analogous metric in the US has been trending sharply higher with the deficit narrowing at an annual pace of 20.5% in 2008. A widening external gap in the Euro area coupled with a contracting one across the Atlantic implies a net outflow of capital from the currency bloc and into the States, extending our medium-term expectations of EURUSD downside into the long-term outlook.
