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ZEW German economic sentiment gains sharply in January

  • ZEW German economic sentiment rises sharply to 26.7 in January.
  • Current Conditions sub-index climbed to -9.5 in January.
  • ZEW economic sentiment for the Eurozone hiked to 25.6 in January.
  • Eurozone's current conditions sub-index increased to -9.9 in January.

One of the largest economic research institutes in Germany, ZEW, announced the German economic sentiment report on Tuesday. Beating the analysts’ estimate, the report contributed to pushing the EUR/USD pair modestly higher in the forex market.

As per Tuesday’s report, German economic sentiment started the new year on a good note. In December, the economic indicator was reported at 10.7, following which, analysts had anticipated it to push further higher to 15.2 in January. Noting 26.7 for January, the indicator suggested rising stability in the German economy with the start of 2020.

Current Conditions Sub-Index Climbed To -9.5 In January

According to the sources, January’s 26.7 marks the best figure for ZEW German economic sentiment in almost five years. The “Current Conditions” sub-index of the economic indicator was reported at -9.5 for January that marks a massive improvement of 10.4 points as compared to the figure for December. Analysts were expecting the sub-index to improve to -13.5 in January.

Professor Achim Wambach, the current president at ZEW, commented on the report and stated:

“The continued strong increase of the ZEW Indicator of Economic Sentiment I mainly due to the recent settlement of the trade dispute between the USA and China. This gives rise to the hope that the trade dispute’s negative effects on the German economy will be less pronounced than previously thought. In addition, the German economy developed slightly better than expected in the previous year. Although the outlook has improved, growth is still expected to remain below average.”

Economic Sentiment Improved Sharply In The Eurozone As Well

ZEW economic sentiment for the broader Eurozone also recorded a massive improvement in January and was noted at 25.6. In December, the indicator remained capped at 11.2 while analysts were expecting it to significantly drop to 5.5 in January. Beating the analysts’ forecast by a significant margin, the report further fueled strength for Euro in the forex market. The Current Condition sub-index for the Eurozone was noted at -9.9 that marked a 4.8 points improvement as compared to the figure for December.

The EUR/USD currency pair was seen gaining strength in the forex market following the release of the economic data. From a daily low of 1.1085, the report pushed the pair as high ass 1.1115. Despite the positivity circling the European economy at large, however, much of the gain was seen lost later in the day with the currency pair struggling to keep above 1.11 level at the moment. At the time of writing, EUR/USD is exchanging hands at 1.1102 in the forex market.  

About the author

Michael Harris
Michael Harris
I began trading in my early 20's at a local company and since then have combined my knowledge and love of content to become a news writer. I am passionate about bringing insightful articles to readers and hope to add some value to your portfolios!

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