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Posted August 13th, 2014 by Charles Purdy

Euro undermined by poor German economic sentiment

Confidence amongst investors in the Eurozone’s largest economy has fallen to the lowest level since 2012, and the single currency depreciated yesterday as a result. The German ZEW Economic Sentiment index came out even lower than was forecast yesterday, suggesting that German growth in the third quarter is likely to be limited. Reasons for declining optimism may include the instability in Ukraine, Russian sanctions and a lack of demand from other large European states such as France and Italy. Whatever the most relevant reasons are, it certainly looks as though the fragile recovery initiated in the eighteen-nation bloc is now stalling. As a result we saw the euro move towards its lowest rate since November 2013 against the US dollar and weaken against sterling.

Today, Eurozone monthly industrial production data is due out in the morning and is expected to show a 0.5% increase in output. However, this data tends to have a more limited effect as data from the major Eurozone economies is released at an earlier date. More influential data is due out tomorrow in the form of German preliminary growth data, which will show whether the poor sentiment in Germany is justified.

If you are looking to buy or sell euros, we suggest contacting your trader now for live rates, news and currency-purchasing strategies.

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