THE TAKEAWAY: German Economic confidence dropped in June -> debt crisis weighs on economic sentiment -> Euro volatile, beset by weak economic data and Greek political developments
The German-based ZEW center said its monthly index of investor and analyst expectations fell more than economists forecast to -16.9 from 10.8 in May. The current situation index fell to 33.2 from the previous 44.1. Economists had expected a reading of 39.0. The ZEW index attempts to predict economic developments six months in advance.
The report represented a marked departure from last month’s results, when the center said that economic conditions have stabilized and said that it generally expects additional positive developments out of Germany over the next 6 months.
Germany’s economy, which has kept itself afloat despite weak growth numbers, has come under pressure as increased austerity measures around Europe curb demand for German goods. Recent concerns over the uncertain Greek political situation have caused some doubts over the Euro’s future.
News today that the Greek government has formed a committee to re-negotiate the EU-Greek bailout agreement sent the Euro lower, while later news that a coalition is likely to be formed sent it higher. The single currency fell against the US Dollar and Japanese Yen after the ZEW survey’s release.
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