German ZEW economic sentiment records the highest since February 2018

ZEW announced the German economic sentiment report for December earlier this afternoon. Beating analysts forecast and figure for November, the report fueled an upward rally in the EUR/USD.

As per December’s report, the German ZEW economic sentiment hiked to 10.7 this month. In a previous estimate, analysts had anticipated the figure to be printed around 1.1 in December. The economic research institute had declared November’s economic sentiment at a much lower -2.1. Owing to the massive improvement, the data represents the striving German economy despite the rising global economic uncertainty.

Current Situation Index Rose To -19.9 In December From November’s -24.7

Following the report, economists also highlighted that December’s economic sentiment marks the highest for Germany since February 2018. The current situation index was noted at -24.7 in November, after which, analysts had expected a slight improvement to -22.0 in December. Recording -19.9 for December, ZEW expressed significant improvement in the current situation index as well.

ZEW also provided insights into the Eurozone’s economic sentiment. In the Eurozone, the sentiment was registered at -1 in November. As per the previous forecast, analysts were expecting an improvement to 2.2 in December. Printing 11.2, the Eurozone’s economic sentiment highlighted a remarkable improvement in December. In terms of the current situation index, the Eurozone saw an increase of 4.9 points in December.

ZEW’s President’s Take On The German Economic Sentiment

President Achim Wambach of ZEW commented on the German economic sentiment report and stated:

“At first glance, the renewed substantial increase of the ZEW Indicator of Economic Sentiment may seem surprising. It rests on the hope that German exports and private consumption will develop better than previously thought. This hope results from a higher than expected German foreign trade surplus in October, alongside relatively robust economic growth in the EU in the third quarter and a stable German labor market. The rather unfavorable figures for industrial production and incoming orders for October, however, show that the economy is still quite fragile”.

As per the sources, the forex market responded rather lucratively to the upbeat ZEW economic indicator. Following the report, EUR/USD was seen trading around 20% higher. The currency pair hiked from the daily low of around 1.1062 and printed a daily high of 1.1095, challenging the strong resistance located at 1.1100 yet another time. The previous break above the crucial resistance was seen unstable with the market having immediately crashed back below the 1.1100 level. A daily close above 1.1100, as per the forex experts, will hint at the prospect for further upward rallies in the upcoming weeks.