A couple of interesting data points on Europe have surfaced over the past couple of weeks which are worth highlighting. The first is the "Europhoria" exhibited in the economic sentiment readings. Across a range of economic sentiment indicators, the Eurozone economy is looking the best its been in years. Of course you need to see actual follow through in the hard data, but the survey data often leads the activity data and it can also reflect an "animal spirits" dynamic that builds on itself. Whatever your take is the survey data look broadly the best in years.

Thus it's no wonder then that the Euro has been performing so well. Indeed, with political risk arguably peaking, and economic sentiment surging, the Euro has surged from a place of oversold/crowded shorts and undervalued to now somewhat crowded looking longs. Indeed when futures positioning gets this stretched to the long side it usually portends a pause, but then again with valuation tailwinds and solid economic sentiment perhaps the breakout can continue.

Europhoria: Eurozone economic sentiment is the strongest since 2000 as the tailwinds of ECBQE, solid asset price performance, a weak Euro, gradual yet real progress on reforms, and a rebounding global economy have boosted confidence.

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As a result the Euro has undertaken a significant rally from a place of being oversold and undervalued - I flagged this in a previous edition of the Weekly Macro Themes report. 

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