- Aurelija Augulyte, currency analyst at Nordea
German investor confidence strengthened for the third consecutive month to reach the highest level in 11 months in January. The ZEW index, which measures investor sentiment for the next six months and based on a survey of 233 analysts and investors, jumped to 48.4 in the beginning of the year, up from 34.9 in December, recovering further form the lows registered in October. A separate indicator of current conditions advanced to 22.4 from 10.0 a month earlier and overshooting forecast of 14.8. The reading comes two days before the ECB's policy meeting on Thursday to assess broad-based government-bond purchases.
Meanwhile, the Danish central bank unexpectedly cut its interest rates as it sought to temper investors' interest in the Danish Krone, as market participants are looking for other triple-A rated European countries to park their cash. Nationalbank slashed its deposit rate to minus 0.2% from minus 0.05%, and the lending rate to 0.05% from 0.2%. The central bank's main policy goal is to ensure stability of the nation's currency versus the Euro, to support Danish exporters and maintain inflation low and stable. In order to meet those goals, Nationalbank normally follows interest rate moves by the ECB, but occasionally it also makes independent policy decision. Elsewhere, in Italy trade surplus narrowed in November to 3.54 billion euros compared with a 5.397 billion euros a month earlier.
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