Positive German ZEW survey Sparks Euro Strength
THE TAKEAWAY: ZEW survey shows gains in January -> Germany shows signs of stabilizing but rest of Europe crumbles-> Euro jumps 20 points on positive news…
As the European Central Bank lends record amounts, the German economy showed signs that the worst may be over with the well-watched ZEW survey, which aims to predict investor expectations six months in advanced, surged to -21.6 in January from December’s -53.8. This follows on the heals of rising German business confidence and falling unemployment this past December.
However, although providing welcome market encouragement, the survey results do not seem supported by other significant developments. Inflation, for example, remains higher in Germany than in some other EU countries like France, but lower than the UK which has been engaged in quantitative easing measures. Moreover, Germany has recently begun to struggle with weakened demand from economies on the European periphery, developments which have decreased export opportunities for the cornerstone German manufacturing sector.
The Euro jumped some 30 points after the ZEW release and as of this report was trading by 1.2791.
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