- ZEW
German business morale deteriorated the most since the end of 2012 in August as the Ukraine crisis weighed sharply on investors' confidence. According to the ZEW economic institute, business sentiment continued falling down for the eight straight month, as potential trade-war with Russia fuelled anxiety in the Europe's powerhouse. The lead indicator, which shows economic outlook of 350 respondents in Germany for the six month ahead, fell to 8.6 in August considerably down from 27.1 in July, recording the biggest slump since June 2012. As a result, the single currency plummeted to the lowest level in nine months versus the U.S. Dollar, losing as much as 0.15% to trade at 1.3664.
As Russia is one of Germany's main trading partner, tough sanctions imposed by hostile sides will hurt the Euro zone including Europe's number one economy even more than the U.S. economy. Germany is seen to enter a contraction in the second half of the year, with GDP shrinking 0.1% in the three months to June, marking the first slowdown since 2012. German second-quarter GDP data are scheduled to be released on Thursday, August 14. The Current Situation Indicator dipped by 17.5 points and came in at 44.3 compared with 61.8 recorded in July and well below economists' forecasts of the 54.0 reading. Nevertheless, ZEW index is a frequent subject to criticism as it can be volatile and is therefore not particularly reliable.
© Dukascopy Bank SA