The Euro found a short term fall overnight from disappointing sentiment data out of Germany. This came from the monthly release of the ZEW survey.
The Centre for European Economic Research (ZEW), questions financial experts throughout Europe every month in order to make a medium-term forecast about Germany’s economic conditions. They ask experts to assess the current situation and to predict the future direction of the economy. For all components of the survey, responses are restricted to positive, negative, or unchanged. This simple structure allows the survey to be quick and efficient in terms of turnaround time, as well as easy to understand and interpret.
Unlike the Economic Sentiment Indicator which looks into the future direction of the economy, the Current Situation Indicator focuses on the results of the survey that relate to the current health of the German economy. Expert opinions on whether the current situation is improved, worsened, or unchanged are summarized as the number of positive responses minus the number of negative responses. A higher headline figure indicates a stronger economy and better business climate.
The Sentiment levels in Germany have fallen since December, 2013. These figures have fallen from heights of 62 in December, to 8.6 this month. It is easy to see that economic experts still feel that there are huge fundamental concerns in Germany, mainly consisting of Euro-zone concerns.
Tonight, investors are expecting Switzerland’s ZEW out at 7pm AEST. This has also shown a continued reduction in sentiment levels. This may further weaken the CHF against the AUD. However, the movement is dependent on how this month’s result is, compared against the previous figure of 0.1.