German economic sentiment fall again

Economic sentiment in Europe continues to deteriorate, as evidenced by the development of a decline in the ZEW index. The Economic Sentiment Index fell to 40.4 in August from 63.3 a month earlier and a peak of 84.4 in May.

For the eurozone, it fell 18.5 points in August to 42.7.

The release said the risk to Germany’s economy is increasing both from the 4th wave of covid-19 and the slowdown in China.

The current assessment continues to improve, hitting the highest levels since the end of 2018. However, market participants are paying more attention to sentiment indicators as it reflects future conjuncture.

The chances are increasing that the peak speed of economic recovery is already behind us, and more time may be needed for a full economic recovery and the normalisation of monetary policy.

This data added to the pressure on the euro on Tuesday in contrast to the strong US data, as it did not bring the ECB’s stimulus phase-out any closer. As a result, the euro fell to an 18-month low against the pound and is testing an important support area at $1.1700.