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German ZEW Economic Sentiment better than expected, US data favor rate hike

US-dollar upwards

The today released ZEW index for the economic outlook in Germany is better than assumed in the forecasts. Also for the entire euro area the value of the index improved, but remained below the forecasts. The also published today figures on US consumer prices (CPI) were broadly within the predicted values and they support the US dollar one day before the interest rate decision by the Fed.

Economic sentiment overall positively in the EU

The information published by the ZEW figures on economic expectations, determined by surveys of 233 analysts and financial market experts, show a general increase in confidence of the economy in the entire euro zone. The ZEW index for Germany rose by 5.7 points in December to 16.1 points. Forecasts predicted 15 points for December. While the German economy has been struggling with a slowing economy in the emerging countries, according to the ZEW-Chairman Clemens Feust it is sufficiently robust to cope the challenges arising therefrom. Nevertheless, it remains to be noted that the 16.1 points still well below the long-term average of 24.8 points.

Auch in der gesamten Euro-Zone die Erwartungen in der Entwicklung der Wirtschaft haben sich deutlich gegenüber dem Vormonat verbessert. Der ZEW-Index für die Eurozone um 5,6 Punkte auf nun 33,9 Punkte, aber es blieb einen halben Punkt unter den Erwartungen der Prognosen. Der Wert zeigt auch, dass Deutschland nach wie vor die treibende Kraft für die Wirtschaft in der Eurozone. Zur gleichen Zeit, andere Staaten wie Portugal und Griechenland, müssen noch große Anstrengungen unternommen, um die Wirtschaft wieder auf Kurs bringen zu machen.

US data make rate hike by the Fed more probable

Today in the United States the figures for the consumer price index were released. Even if there were no unexpected surprises, the numbers were able to meet analysts' expectations or slightly exceed. The core rate of consumer prices rose as expected in November by 0.2 percent and year on year by 2.0 percent. In November it was still YoY at 1.9%. The numbers had been expected in the financial markets with tension because they are an important indicator for the possibly tomorrow conducted rate hike by the Fed. As the number met the expectations, they supported the US-Dollar against the most major currencies, because they increase the probability of a rate hike above the 75 percent, which were estimated by analysts. However, in recent years the optimistic expectation was disappointed more than once by the Fed. This becomes apparent this time a certain reticence in the foreign exchange market, since the downward movement not began until more than half an hour after the figures were released.

The USD rose against the most major currencies. The euro fell back below the mark of 1.10 dollars, and the pair EUR/USD is currently trading at 1.9022, which corresponds to a decline of 0.65 percent. Also the GBP lost 0.65 percent at 1.5044 and the Australien Dollar 0,76 percent at 0.7191.

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