Euro-Zone Economic Sentiment Lowest Since 1993
Posted on 28. Nov, 2008 by admin in Daily Euro Analysis, Euro Currency, Euro Currency News
The EUR was unable to make any profit over its rival pairs after the recent announcement by the European Commission of a stimulus plan for 200 billion EUR ($259 billion) to be injected into the economy. The EUR initially gained ground versus the US Dollar following the rise in European stock markets, but issued a retreat after disappointing economic data put downward pressure on the 15-nation currency.
The economic sentiment index for the region tumbled to 74.9 this month, from an expected 78.0. This marked its lowest reading since August 1993, reflecting growing pessimism in industry and service as weakness in the European economy continues unabated.
The German Unemployment Change indicator registered a significant reduction in November, falling to 10k unemployed from 23k last month; its lowest reading since 1992. As a result, the head of the Federal Labour Office warned that labor markets would soon feel the impact of the economic downturn.
On a different note, European Central Bank (ECB) President Jean-Claude Trichet declined to make any comments about a Euro-Zone Interest Rate cut after stating Wednesday that the bank would cut rates next week unless there was evidence that inflation pressures had eased. Many analysts expect the ECB to cut rates by 50 basis points to 2.75% on Dec.4, while some economists said an even deeper cut might be needed.
News being released from the Euro-Zone today should provide little fluctuation in the market. However, while indicators have had less impact these past weeks due to the financial crisis, they nevertheless still carry weight in the confidence of investors. Any negative economic data will have the potential to cause harm to a currency’s value if it has the power to sway speculators.
