The German ZEW Economic Sentiment indicator has given a slightly underwhelming reading. Although the current conditions of the German economy continue to spike higher as the economy re-emerges from the COVID lockdown of earlier in 2021, forward expectations are tempering the exuberance.
Given the wild swings that we will be seeing in economic data as economies look to re-open this year, the data continues to drive a weaker EUR.
The overall Economic Sentiment gauge fell slightly more than expected to 63.3 (75.2 expected, 79.8 previous). This came despite optimism over the Current Conditions component, with a jump to +21.9 (+5.0 exp, up from -9.1 previous). The fly in the ointment came with the Expectations component falling to 61.2 from the previous 81.3.
Adds a sense of disappointment with recent German data
The ZEW has close links to forward expectations of German growth over the coming months and may slightly temper some overly enthusiastic expectations. It just adds to a sense of mild disappointment this morning after the German Factory Orders also missed expectations.
EUR has already been sluggish this morning relative to major forex
We have seen EUR/USD slipping around -20 pips lower in response to the ZEW data
This will just increase the negative pressure that has been forming on EUR