Tuesday was a good day for the euro - and a less good one for those ECB Council members who were talking it down last week. EUR/USD rose to a best level during the day of 1.2294; the highest in almost a week. Overnight in Asia it has been up further to 1.2324; the strongest level since December 2014.
The first piece of good economic news was a very upbeat German ZEW Survey. According to their Press release, “The latest survey results reveal an optimistic outlook for the German economy in the first six months of 2018. With 95.2 out of 100 points, this is the most positive assessment of the current economic situation since the introduction of the survey in December 1991. Private consumption, which was the most important driver of economic growth in 2017, is likely to continue to stimulate growth in the coming six months according to the survey participants. The assessment of the global economic environment in Europe and the USA is also much more favourable than it was at the end of 2017.”
Second, was the European Commission’s Eurozone consumer confidence measure which rose to 1.3 points from 0.5 points in December, well above market consensus of an increase to 0.6. This is the highest level of the indicator since August 2000. The highest ever level of the index, which dates back to 1985, was the 2.1 points hit in May 2000.
Before the key ECB meeting on Thursday, we have the preliminary Eurozone ‘flash’ PMI surveys later today and the ifo survey on Thursday morning. In Davos, German Chancellor Angela Merkel, French President Emmanuel Macron and Italian Prime Minister Paolo Gentiloni are all scheduled to give speeches.
The EUR opens in Europe this morning at USD1.2315 and GBP/EUR1.1390.