BNY’s Geoff Yu argues that while Eurozone growth and inflation risks are real, being long the Euro (EUR) is not the best way to express this view. Yu highlights strong industrial data and fiscal support that favor European assets, but stresses weak demand, European Central Bank (ECB) policy-error risk and rich EUR valuation. It recommends EUR-funded carry trades instead. "Bottom line, Europe’s recovery is real, and inflation risk is real. Long EUR is the wrong expression for these views. Industrial and fiscal support favor European assets, while weak demand, policy-error risk and rich valuation weigh on the currency." "The recovery is not yet broad based. German services fell to 48.
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