Source: ForexYard
The ZEW Economic Sentiment reports for the Euro-Zone and Germany, which were released Tuesday at 9:00 GMT, showed much better than forecasted data resulting in a jump for the EUR. The ZEW Economic Sentiment is a leading indicator of economic health which aims to rate the 6 month economic outlook for the Euro-Zone. Since Germany is its largest economy, the German ZEW tends to have a much greater effect on the currency upon release.
German investor confidence rose to a 3-year high in June, increasing to 44.8 from 31.1 in May, signaling that investors believe the recession in Europe’s largest economy is coming to an end, showing increased optimism among the financial markets.
However, this optimism may be a bit premature as industrial production and incoming orders are still weak. According to the German Institute for Economic Research (DIW), economic outlook forecasts would likely drop 7% in the 2nd quarter. This is worse than previously predicted. The Bundesbank has also forecast that the economy will contract by 6.2%. It seems as though the growth expectations of most financial analysts seem to be a bit rash since the backbone of the German economy remains weak.
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