The Euro Exchange Rate was in the region of 1.3337against the US Dollar as of 11:17 am GMT
Yesterday we reported that Danish banking figure Lars Seier Christensen considered the Euro to be ‘doomed’ and its current rebound the result of ‘fake solutions where people think that the problem is contained or being addressed, which it isn’t at all.’
Christensen’s comments came after last week’s 4Q GDP data for key Eurozone members Germany, France and Italy was worryingly below expectations.
But today there were positive developments in the currency bloc.
The latest German ZEW economic sentiment survey increased by 16.7 points from January to February. This third consecutive monthly climb takes the level to 48.2 points. A further ZEW report showed that the assessment of the current economic situation in Germany is little changed from January, with the indicator having fallen by 1.9 points to 5.2.
The press release which accompanied the data stated: ‘As reflected by the latest data on Germany’s gross domestic product, business activity has cooled down significantly towards the end of 2012. However, the increase of the ZEW Indicator of Economic Sentiment in February shows that the financial market experts expect the economic situation to improve during the next months.’
Meanwhile ZEW President Professor Wolfgang Franz was quoted as saying: ‘The financial market experts have made their peace with the weak fourth quarter of 2012. In their opinion the German economy faces less headwinds from the euro crisis than throughout the last months. If this situation remains unchanged during the next months, German business activity may pick up speed moderately’.
A separate ZEW report revealed that when it comes to the Eurozone, economic expectations have increased significantly. In February the indicator jumped to 42.4, an increase of 11.2 points. The indicator for the current economic situation in the Eurozone came in at minus 75.6 – relatively unchanged from January’s level.
Whilst this appears to be an optimistic development some industry experts have questioned the veracity of the ZEW surveys. For example, ING Bank’s Carsten Brzeski has argued: ‘The ZEW index has not the best track record when it comes to predicting German economic activity. In fact, since 2006, the index had a tendency to “miss” the periods of strong growth.’ Although he did add: ‘Since mid-2011, however, the components of the ZEW and the Ifo have broadly stayed in tune. With this in mind, we could see another increase of Germany’s leading confidence indicator, the Ifo index, at the end of this week. Without any single hard data for the year 2013, the prospects for the German economy look promising. Even if the real economy only lives up to half the expectations recently created by soft indicators, any fears of a technical recession should turn out to have been unjustified.’
Alastair McCaig also commented: ‘This morning’s German ZEW economic sentiment figures should ensure that the market is given a sense of direction, and it will be interesting to see if it can be as strong as it was last month.’
Before the release of this morning’s data the Euro was largely flat, although it did fall against the Pound after the British currency strengthened on the expectation of optimistic UK employment figures.
Although the Euro briefly rose in the immediate aftermath of the report’s publication a downward correction returned it to its previous levels.
Some industry experts, including European Central Bank President Mario Draghi, have expressed concerns that the Euro’s present strength could have a negative impact on Eurozone growth.
Following the release of today’s ZEW surveys chief Eurozone economist Juergen Michels asserted: ‘Data from Germany continues to be good and the euro’s appreciation hasn’t had a very big effect yet. Data from the rest of the region is rather mixed as underlying problems in private and public budgets persist.’
Investors will now be looking ahead to the next pieces of influential Eurozone news, Spanish Prime Minister Rajoy’s State of the Nation Debate (taking place this evening) and tomorrow’s German consumer price index.
Current Euro Exchange Rates
As of 11:17 am
The Euro to Pound Sterling exchange rate is currently trading in the region of 0.8607
The Euro to US Dollar exchange rate is currently trading in the region of 1.3337
The Euro to Australian Dollar exchange rate is currently trading in the region of 1.2931
The Euro to New Zealand Dollar exchange rate is currently trading in the region of 1.5804
The Euro to Canadian Dollar exchange rate is currently trading in the region of 1.3484
The Euro to Japanese Yen exchange rate is currently trading in the region of 124.6180
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