Is the euro finally beginning to wilt under poor economic data?

The numbers have been dismal

This year in Europe is all about the end of QE. That’s supposed to signify Europe turning a corner but the economic data is showing otherwise.

Maybe it’s the strengthening of the euro, maybe it’s the political mess in Europe or maybe the structural problems are too much to overcome. Whatever it is, the numbers are dismal.

The Citi economic surprise index, which measures economic data compared to economists expectations is at -91.8. That’s the worst since 2012. To give you a sense of how bad that is, the 0 level is neutral and the next-closest major economy is Canada at -45.9.

Another example came today as the ZEW missed estimates and the forward-looking ‘expectations’ component fell to the lowest since 2012.

Earlier this month, February German factory orders were expected to bounce 1.5% after a 3.5% drop in January. Instead, they rose just 0.3%.

The weakness is broad-based but especially evident in the richer countries.

So far the euro has been able to withstand the disappointment. That’s in large part due to expectations about the end of QE. What’s not factored into the equation is how long rates might stay negative or flat after the ECB stops buying bonds. That timeline is slowly getting extended.

The data may yet turn higher — it has every reason to — but the growing risk is that ECB officials stop the self-congratulation and start to express worries. That would send the euro scurrying to the downside.