The consensus view is that downside economic risks are greater in the US than the Eurozone. I am sceptical.

Monetary policy should be a much bigger drag in Euroland. After last month's cut, the Fed funds target rate is unchanged from 18 months ago. The ECB has hiked its repo rate by 150 b.p. over the same period. Credit conditions look at least as restrictive as in the US: according to the latest ECB survey, a net 31% of banks tightened standards on corporate lending in the third quarter – the highest since Q2 2003.

The chart shows the OECD’s leading indicator indices, designed to predict industrial activity about six months ahead. The US index has picked up since the spring, though slipped back recently. By contrast, the Eurozone index has been weakening steadily and now suggests industrial stagnation. Within the region the weakest country indices are Italy and Spain.

If the indices are correct, forecasts of further Fed rate cuts while the ECB stands pat look questionable. Any revision to expectations could hurt the euro.