Consumer confidence in the Euro-zone held at -8 in September, the highest level since May 2002 and signals a mild improvement as last month’s figure was revised down to -9. Industrial confidence also improved back up to +4, which is the best reading since September 2000. The sentiment figures are in line with the most recent German ZEW and IFO surveys, which showed an improvement in the current assessment indices. The question remains: is confidence peaking? With the ECB set to hike next week and impending VAT hikes for Germany in January 2007, optimism could be on the decline.

Immediate EUR/USD reaction to the combination of the confidence releases and lower CPI readings only brought the pair about 10 points lower to 1.2662.


Terri Belkas