German ZEW Economic Sentiment Index unexpectedly rises to 37.3 in September vs. 27.3 expected
- Germany’s ZEW Economic Sentiment Index rises to 37.3 in September.
- EUR/USD hovers near 1.1800 after German and Eurozone ZEW surveys.
The headline German ZEW Economic Sentiment Index rose to 37.3 in September from 34.7 in August, compared to the market consensus of 27.3.
The Current Situation Index worsened to -76.4 in the same period, as against the August reading of -68.6. Markets expected a -75 print.
The Eurozone ZEW Economic Sentiment Index came in at 26.1 in September after reporting 25.1 in August. Data beat the estimated reading of 20.3.
Key points
Financial market experts are cautiously optimistic and the ZEW indicator has stabilised, but the economic situation has worsened.
There are still considerable risks, as uncertainty about the us tariff policy and Germany’s autumn of reforms continues.
Market reaction
The EUR/USD pair keeps its range play intact near 1.1800 after the mixed German and Eurozone ZEW surveys. The pair is trading 0.33% higher on the day, as of writing.
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.31% | -0.24% | -0.22% | -0.03% | 0.03% | 0.09% | -0.31% | |
| EUR | 0.31% | 0.08% | -0.02% | 0.27% | 0.39% | 0.39% | 0.00% | |
| GBP | 0.24% | -0.08% | -0.06% | 0.20% | 0.32% | 0.32% | -0.09% | |
| JPY | 0.22% | 0.02% | 0.06% | 0.25% | 0.32% | 0.13% | -0.05% | |
| CAD | 0.03% | -0.27% | -0.20% | -0.25% | 0.06% | 0.09% | -0.28% | |
| AUD | -0.03% | -0.39% | -0.32% | -0.32% | -0.06% | 0.09% | -0.39% | |
| NZD | -0.09% | -0.39% | -0.32% | -0.13% | -0.09% | -0.09% | -0.35% | |
| CHF | 0.31% | -0.00% | 0.09% | 0.05% | 0.28% | 0.39% | 0.35% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
This section below was published at 07: GMT as a preview of the German ZEW Survey.
German ZEW Survey Overview
The ZEW will release its German Economic Sentiment Index and the Current Situation Index at 0900 GMT in the EU session later this Tuesday, reflecting institutional investors’ opinions for the next six months.
The headline Economic Sentiment Index is expected to come in at 27.3 in September, as against the 34.7 reading booked in the previous month. Meanwhile, the Current Situation Sub-Index is seen falling to -75 during the reported month from -68.6 in August.
How could the German ZEW Survey affect EUR/USD?
Ahead of the data, the prevalent selling bias surrounding the US Dollar (USD) lifts the EUR/USD pair to the 1.1800 mark, or its highest level since July 3. A stronger-than-expected German data might fuel optimism about the economic outlook for the Eurozone's largest economy and provide an additional boost to the shared currency. This, in turn, should assist the EUR/USD pair in prolonging its upward trajectory.
Meanwhile, the market reaction to any disappointment is more likely to be limited amid diminishing odds for any further rate cuts by the European Central Bank (ECB) and rising bets for a more aggressive policy easing by the US Federal Reserve (Fed). This, in turn, suggests that the path of least resistance for the EUR/USD pair is to the upside, and any corrective pullback could be seen as a buying opportunity.
German economy FAQs
The German economy has a significant impact on the Euro due to its status as the largest economy within the Eurozone. Germany's economic performance, its GDP, employment, and inflation, can greatly influence the overall stability and confidence in the Euro. As Germany's economy strengthens, it can bolster the Euro's value, while the opposite is true if it weakens. Overall, the German economy plays a crucial role in shaping the Euro's strength and perception in global markets.
Germany is the largest economy in the Eurozone and therefore an influential actor in the region. During the Eurozone sovereign debt crisis in 2009-12, Germany was pivotal in setting up various stability funds to bail out debtor countries. It took a leadership role in the implementation of the 'Fiscal Compact' following the crisis – a set of more stringent rules to manage member states’ finances and punish ‘debt sinners’. Germany spearheaded a culture of ‘Financial Stability’ and the German economic model has been widely used as a blueprint for economic growth by fellow Eurozone members.
Bunds are bonds issued by the German government. Like all bonds they pay holders a regular interest payment, or coupon, followed by the full value of the loan, or principal, at maturity. Because Germany has the largest economy in the Eurozone, Bunds are used as a benchmark for other European government bonds. Long-term Bunds are viewed as a solid, risk-free investment as they are backed by the full faith and credit of the German nation. For this reason they are treated as a safe-haven by investors – gaining in value in times of crisis, whilst falling during periods of prosperity.
German Bund Yields measure the annual return an investor can expect from holding German government bonds, or Bunds. Like other bonds, Bunds pay holders interest at regular intervals, called the ‘coupon’, followed by the full value of the bond at maturity. Whilst the coupon is fixed, the Yield varies as it takes into account changes in the bond's price, and it is therefore considered a more accurate reflection of return. A decline in the bund's price raises the coupon as a percentage of the loan, resulting in a higher Yield and vice versa for a rise. This explains why Bund Yields move inversely to prices.
The Bundesbank is the central bank of Germany. It plays a key role in implementing monetary policy within Germany, and central banks in the region more broadly. Its goal is price stability, or keeping inflation low and predictable. It is responsible for ensuring the smooth operation of payment systems in Germany and participates in the oversight of financial institutions. The Bundesbank has a reputation for being conservative, prioritizing the fight against inflation over economic growth. It has been influential in the setup and policy of the European Central Bank (ECB).
Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
