Eurozone ZEW Advances, Current Situations at Highest Level

Eurozone sentiment indicator ZEW retreated slightly to 35.6 for the month of June from 37.7 in the previous month. This was below expectations of 37.2, and a retreat from its highest levels in 22 months reached last month with a slight increase in participants who believe conditions will aggravate. Nevertheless, the current conditions indicator advanced strongly to 28.7 from 20.5 earlier, with a significant increase in the number of participants who believe that the conditions are good. This reading was the strongest since Jan 2008.

There has been a monthly improvement in the outlooks for France and Italy who continue to provide some support around the overall directions of the Eurozone. There has been an increase in the inflation expectations of this month to a net score of 23.7 from 16.4 earlier. The general trust remains in the Eurozone growth expectations strong on the short term, especially that the monetary policy is still providing strong support and strong reading for current outlooks. The trust in the growth expectations will continue to reduce the need for an excessive expansion monetary policy.

The ECB will also consider inflation expectations, as the movement there will lead to more trust in gradual inflation increase in the few coming months, which should encourage ECB to gradually cut on the monetary policy stimulates.

There was no immediate effect on the market, as the EUR/USD remained flat around 1.1525 before the ECB meeting on Thursday

DailyForex.com Team
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