According to the January release of the Center for European Economic Research, economic optimism has bounced back – and in full force. The indicator surged in the monthly reading, rising to 31.5. This is 24.6 points higher than the 6.9 witnessed in December, and the highest figure since mid 2010. Subsequently, the subindex reading for current conditions additionally gained, advancing to 7.1 from 5.7 last month.
Separately, sentiment for the European Union as a whole was additionally higher, advancing to 31.2 from 7.6 in December.
The better than expected release confirms that investment sentiment in the European Union, particularly in Germany, is rebounding from lows seen in mid 2012. Additionally, it is underlines the likelihood that the ECB will shy away from any notions of a rate cut this year – Euro bullish.
Today’s ZEW report now places emphasis on the IFO sentiment survey scheduled for later this week. The report is additionally expected to show an increase in consumer optimism, which would be the third consecutive monthly gain. Estimates are for a 103.1 reading, a jump from last month’s 102.4.
Anticipation remains high for a positive release in the IFO as troubled Spanish benchmark bonds continue to move lower ahead of the end-of-week release. Spanish 10-year yields remain stable to lower, declining to 5.11% from a record 7.76% last year.
Stalling on the session, EURUSD remains supported in the short term by support via the 1.3265 figure. For further advances to ensue, the single currency requires a break above current resistance at 1.3400, which would open scope for an advance on the 1.3484 February 29th session high. Any downside penetration opens the door for a dip to subsequent support via the 1.3128.