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