German Investor Confidence Falls to the Lowest Level Since May 2009, Fitch Sees Concern of Double-Dip Recession in the Euro-Zone

Fundamental Headlines

• BOJ to Support Bank Lending – Wall Street Journal
• Greek Downgrade Hits Euro  – Wall Street Journal
• Investors Overcome Early Caution to Push Rally On  - Financial Times
• U.S. Futures Rise Before Economic Data; Greek Downgrade Hurts Europe Bonds - Bloomberg
• Greek Economic Plan Is Sufficient to Avoid Debt Restructuring, OECD Says  - Bloomberg


EUR/USD – German investor confidence in June plunged to its lowest level since May of 2009. Figures showed that economic sentiment fell to 28.7 in June from 45.8 the previous month, while the current situation indicator rose to -7.9 from -21.6 in the same time period. The ongoing advancement in the ZEW current situation bodes well for the region as investors believe activity in Germany’s real economy is strengthening. Meanwhile, the ZEW economic sentiment for the euro-zone rose to -40.8 in June from -48.5 the month prior, while the current situation for the euro bloc tumbled to 18.8 from 37.6 in May. The data comes to no surprise as the 16-member euro area is faced with ballooning budget deficits, while governments are forced to implement tough austerity measures. Also worth noting, Moody has slashed Greece’s credit rating to junk status, leading Greek 10-year premium to bunds to rise 600 basis points today. Additionally, the chairman of one of Spain’s largest banks warned that Spanish companies and banks could face a financing freeze. This adds concerns for banks in the rest of the bloc as euro-zone banks in 2008 saw a funding freeze that lead several banks to fail. Lastly, across the news wire, Fitch said that there were increasing concerns of a double-dip recession in the 16-member euro area. To discuss this and other topics, please visit the EUR/USD forum.


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Written by Michael Wright, Currency Analyst
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Michael Wright is the author of FX Headlines, Fundamentals vs. Technical’s, Weekly Spotlight, and Forex Trading Weekly Forecast