EUR unfazed by ZEW/production data

Published date: 14/05/2019
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No real reaction to the German ZEW or EU industrial production data just out.  This highlights the immediate focus on the USD, which is what looks set to drive the market in the near term.  

German ZEW current conditions have improved more than expected, with the index rising from 5.5 to 8.2 vs 6.0 forecast.  However, sentiment has deteriorated from 3.1 to -2.1, but markets were looking for a reading here of 5.1.  ZEW EU sentiment is also lower, with the index here dropping from 4.5 to -1.6 against expectations of a 5.0 reading.  

Industrial production was down in March at -0.6%, but this was not as much as the -0.8% expected, though the annualised rate is unchanged at -0.3%.  

Looking at the drivers today, we can see that EUR/GBP buying has given the EUR a helping hand against the USD, though the spot rate has clearly struggled into the 1.1260-70 resistance zone which continues to cap the market.  

EUR vs CHF and JPY have recovered a little, yet this is part of the bigger risk picture, which has stabilised despite little change in the US-China stand-off on trade.  There is the potential for fresh risk aversion to drive the EUR higher, as traders use the single currency for funding and these trades are closed out when panic hits.


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