As the European session opened the Euro was trading in the region of a three-week high against its broadly softening US rival.
The common currency went on to extend gains against the ‘Greenback’ as a gauge of German economic sentiment unexpectedly hit an over three-year high in September.
The ZEW economic sentiment index advanced from 42 to 49.6 this month, smashing expectations for a reading of 45.
The measure aims to predict economic developments six months ahead.
Similarly, a measure of the current situation in Germany rose to 30.6 in September rather than the 20.0 expected. The index stood at 18.3 in August.
Before the data was published one Frankfurt based chief-economist noted; ‘Investor sentiment is turning extremely positive with the news of the Euro-area stabilising.’ Although he did add; ‘The thing is, if we look at sentiment verses real or hard economic data, sentiment is running quite a bit ahead of what the actual data show.’
Meanwhile, HSBC economist Lothar Hessler asserted that ‘The German economy is on a recovery path. The economies in Europe’s periphery are falling into step, emerging markets should have left the worst behind so, overall, positive developments are prevailing.’
The Euro/US Dollar pairing is currently trading in the region of 1.3361
The ZEW Eurozone economic sentiment gauge climbed from 44 in August to 58.6 in September.
After the indexes surprised to the upside the Euro consolidated and extended gains against the US Dollar and recovered lost ground against the Pound.
The Euro also rallied against peers like the Euro.
Tomorrow we can expect significant market volatility as the Federal Open Market Committee delivers its policy statement. If the Fed opts to trim stimulus by 15 billion Dollars, as expected, the US Dollar may strengthen and the momentum driving the EUR/USD paring could falter.
However, a dovish statement from the FOMC could limit EUR/USD losses.
Given the amount of interest surrounding the FOMC policy meeting, tomorrow’s construction output data for the Eurozone, though of interest, is unlikely to be responsible for notable Euro movement.
Euro (EUR) Exchange Rates
As of 11:20
The Euro/US Dollar Exchange Rate is currently in the region of: 1.3361 >
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8407 >
The Euro/Australian Dollar Exchange Rate is currently in the region of: 1.4333 >
The Euro/ New Zealand Dollar Exchange Rate is currently in the region of: 1.6325 >
The Euro/ Canadian Dollar Exchange Rate is currently in the region of: 1.3773 >