Sentiment worsens citing higher energy costs, reduced profitability
EU ZEW Economic Sentiment Index (AUG): -54.9 vs -57 expGerman ZEW Economic Sentiment Index (AUG): -55.3 vs -53.8 exp
Customize and filter live economic data using our DaliyFX economic calendar
Energy costs for eating in the final result
Stubbornly high inflation and a projected rise in energy costs are expected to weaken profits in the private consumption sectorAlready weak economic growth is expected to slow furtherHowever, expectations in the financial sector are improving due to the supposed increase in short-term interest rates. The ECB is almost certain to raise rates in September.
Germany’s ZEW figure is closely watched by market participants (traders, analysts, etc.) given the country’s economic importance to the entire Eurozone. The July figure printed below the 2020 low, indicating a bleak economic outlook for the next 6 months.
ZEW Economic Sentiment (Germany)
Source: Refinitiv, prepare for Richard Snow
ZEW’s economic sentiment figure is an aggregation of six-month economic projections from institutional investors and analysts and functions as a leading indicator of good reputation. Data carries a lot of weight in the industry, as forecasts of future financial conditions are made by highly informed people by virtue of their jobs.
Immediate response to the euro
The EUR/USD chart revealed an initial move to the downside, in line with the broader trend, but price action soon recovered to levels seen before the data release. As the data continues to weigh on already weak fundamentals, I would expect the euro to weaken further, especially as the dollar looks set to strengthen after last week’s CPI drop encouraged dollar selling in the light of the alleged “Fed-Pivot” narrative.
EUR/USD 1 minute chart
Source: TradingView, prepare for Richard Snow
— Written by Richard Snow for DailyFX.com
Contact and follow Richard on Twitter: @RichardSnowFX
element within element. Surely this is not what you wanted to do! Instead, you load your application’s JavaScript package inside the element.
Source link
