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EURUSD (And Futures) Surge On Unprecedented ZEW German And Eurozone Economic Sentiment Beat

Tyler Durden's picture


With the algos having promptly switched to trade stocks higher with dollar weakness (unlike on days when a strong dollar also somehow miraculously leads to stock strength), the world was looking for some data point to validate this morning's ramp in futures, timed perfectly to further neutralize Apple's holiday announcement. The catalyst ended up being the latest ZEW numbers of German and Eurozone economic sentiment, which came so strong in spite of ongoing European insolvency, that all one can do is laugh. These printed as follows: Eurozone ZEW Survey (Economic Sentiment) (Jan) M/M 25.4 vs. Prev. 16.6 (Prev. 15.5); German ZEW Survey (Economic Sentiment) (Jan) M/M 15.4 vs. Exp. 7.0 (Prev. 4.3). Once these hit overnight, the EURUSD went balistic and, of course, futures surged, completely eradicating any threat of a market-wide circuit breaker being hit, which would have been the case hat Apple made the Jobs announcement during regular market hours. On the other hand, how Europe, er, Germany is supposed to preserve its export-led miracle in light of a 500 basis point surge in the EURUSD in just one week, is something only Goldman's Houdini economic team can explain.

And speaking of Goldman, here is their spin on the suddenly all important ZEW number:

ZEW pushes higher again

The ZEW index rose to a reading of 15.4 in January, an 11-point increase on the previous month and a considerable beat on consensus expectations (7.0). Sentiment surrounding the economic outlook in Germany is now at its highest reading for six months. The assessment of current conditions rose slightly from 82.6 to 82.8 (Cons: 83.7).

As we have discussed before, we do not think there is much genuinely new information in the ZEW survey. The divergence between the ZEW survey of financial market practitioners and surveys of businesses such as the Ifo remains wide.



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Tue, 01/18/2011 - 08:30 | Link to Comment Sudden Debt
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Tue, 01/18/2011 - 08:57 | Link to Comment IQ 145
IQ 145's picture

 I wonder how those 50.000 amateur FX traders are doing who are all desperately short the EUR; since it's "obviously" going to 1.17. I particularly remember a week or so ago when Robo Trader and Orly were chortling at each other about how the EUR price chart was nearing their critical Salmonella point, or Houdini number, or whatever imaginary foolishness, and how much profit they were going to make on this "sure thing" short trade. This is why one of the two things my mentor told me in 1981, that were absolutely vital to stop my investing self-destruction, was "forget about FX, it's bad for your equity".

Tue, 01/18/2011 - 09:05 | Link to Comment scratch_and_sniff
scratch_and_sniff's picture

your mentor was a fag.

Tue, 01/18/2011 - 09:06 | Link to Comment Ferg .
Ferg .'s picture

If you use excessive leverage , lack patience  , trade on emotions and don't have a solid strategy then yes , FX is indeed bad for your equity . Otherwise it can be very profitable . I was ( still am ) short the euro from 1.3450 . Was looking solid until around the Tokyo open last night . Moved stop to entry point , no risk to my account at all .

Tue, 01/18/2011 - 08:32 | Link to Comment TradingJoe
TradingJoe's picture

I still see a major storm on the horizon! These exaggerations WILL cost a bunch!

Tue, 01/18/2011 - 08:34 | Link to Comment Racer
Racer's picture

Current situation barely changed yet hopium prevails

Tue, 01/18/2011 - 08:35 | Link to Comment LeBalance
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(shit, there went another reality into the marshmallow machine!)

Tue, 01/18/2011 - 08:37 | Link to Comment Pants McPants
Pants McPants's picture

"The divergence between the ZEW survey of financial market practicioners and surveys and businesses such as Ifo remains wide"

No, you don't say?

Tue, 01/18/2011 - 08:37 | Link to Comment Dick Darlington
Dick Darlington's picture

Keep in mind ZEW "measures" what investors and analysts expect. In light of that it's always eye-watering to see how analyst's expectations are beaten by analyst's expectations. This is the kind of "virtuous circle" uncle Ben was taking abt some time ago. =)

Tue, 01/18/2011 - 08:40 | Link to Comment More_sellers_th...
More_sellers_than_buyers's picture

HAHA can we please just open the dow at 36000 and get this overwith...who gives a fuck about capital markets anymore

Tue, 01/18/2011 - 08:45 | Link to Comment johny2
johny2's picture

euro, dollar, pound, aussie, yen, are all going to have to have the same value. 

Tue, 01/18/2011 - 08:50 | Link to Comment Tense INDIAN
Tense INDIAN's picture

Tyler ...i dont think its the news or comments......its all in the cycles.....


And this :

Tue, 01/18/2011 - 08:49 | Link to Comment kaiten
kaiten's picture

Dont worry, it´s easily explainable. Since January 2011, greeks are in charge of all eurozone statistics. Since now on, there´s no recession in eurozone, ever ;p

Tue, 01/18/2011 - 09:31 | Link to Comment Sudden Debt
Sudden Debt's picture



even if it where a woman, SHE STILL WOULD HAVE A MUSTACHE!


everything makes sence now...

Tue, 01/18/2011 - 08:51 | Link to Comment jbc77
jbc77's picture

Oh how amazing these central bankers are!! They have the global manipulation of the capital markets down to a freakin science!!

On a day where a market bloddbath was inevitable they once again pull a rabit out of their hat!!

Oh, lets tout that Spanish bond auction, which saw rates come in lower. Hey, they failed to mention on CNBC this morning that the ECB probably bought 99.9% of the issue.

It's fairly obvious that when the doo doo hits the fan it's gonna really hit the fan. They keep dodging bullets though. Hey how bout them there internet stocks trading at plus 100 times earnings?

Tue, 01/18/2011 - 08:54 | Link to Comment Ferg .
Ferg .'s picture

To be fair the euro was well bid right from the early Asian session and into/through the European open . I'm still scratching my head as to what the catalyst was . Big story is GBP though . Blasted through that 1.6000 level on the CPI data . An interest rate hike is surely imminent in Britain . Inflation is now at 3.7% , nearly double the BOE's target of 2% . The culprit : rise in VAT and commodity prices .

Tue, 01/18/2011 - 09:02 | Link to Comment DCon
DCon's picture

China said they need more EUR in their Reserves and they apparently bought a lot.


Tue, 01/18/2011 - 09:03 | Link to Comment youngman
youngman's picture

"forget about FX, it's bad for your equity"....................that is why they advertise how easy it is all the time on Bloomberg.....

Tue, 01/18/2011 - 09:09 | Link to Comment Ferg .
Ferg .'s picture

It's really not that difficult if stick to your game plan and control your emotions .

Tue, 01/18/2011 - 09:10 | Link to Comment papaswamp
papaswamp's picture

as the Chinese celebrate their increasing export value.

Tue, 01/18/2011 - 09:12 | Link to Comment GFORCE
GFORCE's picture

No endgames today folks. Move along.

2011 might be a good year. Not for Rosie. 2012 maybe not.

Tue, 01/18/2011 - 10:10 | Link to Comment terranstyler
terranstyler's picture

Tyler, I don't buy this stupid "currency is higher, thus exports decrease" theory. I mean, of course, there's some effect but I think this is mostly "truth spread by propagandized pundits", because a stronger currency leads to more money for the consumer (especially in an import based economy as Germany). Moreover, Germany's exports are rarely standard products that can easily substituted by other country's stuff, but are highly specialized, technologically or qualitatively. So the buyer has not many options than to buy anway. And this all comes of course with the fact that savings in import can be used to reduce the export prices.

Tue, 01/18/2011 - 10:30 | Link to Comment Cash_is_Trash
Cash_is_Trash's picture

A strong currency is good. Savings is good. Production is good. Well-paying jobs at home is good. Manufacturing is good.

Who the hell to villified this idea!?

Wed, 01/19/2011 - 05:50 | Link to Comment terranstyler
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Tue, 01/18/2011 - 10:28 | Link to Comment Cash_is_Trash
Cash_is_Trash's picture

I agree with Sudden. Europe looks a little better after the German report, whom by the way get shafted with the bill for the entire Eurodream bullcrap project.

Rest assured that the United States' position is much worse than Greece, Ireland and Italy...

We're trading in an easy money market with no regard for fundamentals. These indices have only shreds of free market buying and selling.

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