Germany-U.S. yield spreads have narrowed in a EUR-supportive - Scotiabank

 Analysts at Scotiabank explained that fundamental releases are providing support with EUR’s European session rally driven by the release of unexpectedly strong PPI data out of Germany.

Key Quotes:

"The data should provide confidence to ECB policymakers ahead of the next policy decision on June 8, as they look to durable and self-sustaining gains in inflation."

"Forward guidance (‘or lower’ on rates) and the growth outlook (moving to ‘balance’ on risks) are the core focus for June."

"Germany-U.S. yield spreads have narrowed in an EUR-supportive manner and options markets are suggestive of a shift in the balance of risks with risk reversals (up to 3 months) pricing a premium for protection against EUR strength."