The euro gave back much of Tuesday’s advance against the dollar, while ZEW reported a weaker euro area outlook ahead of the European Central Bank’s Oct. 29 policy decision.
ZEW’s October expectations balance for the euro area fell 7.3 points to 18.5. The reading was below a 23.6-point forecast listed by Investing.com and a 24.2-point forecast published by FXStreet.
The balance remained above zero, meaning more respondents expected economic conditions to improve than to deteriorate over the next six months. It measures analysts’ expectations, not economic output. ZEW surveyed 178 analysts from Oct. 12-19. Its separate assessment of current euro area conditions slipped 0.9 point to minus 14.8.
ChartExchange recorded a Tuesday high of $1.1261 per euro and a $1.1226 close for the UTC day. The closing figure was above Monday’s $1.1213 but below Friday’s $1.1238. Those are the provider’s daily figures, rather than an official currency-market closing price.
In Germany, ZEW’s separate measure of economic expectations declined 6.6 points to 28.1. Its current-conditions reading improved 11.2 points to minus 35.9.
ZEW President Achim Wambach said expensive energy was weighing on German household spending and investment by reducing purchasing power and adding to companies’ production costs. He also said energy costs were keeping inflation elevated.
Eurostat reported annual euro area inflation of 3.8% in September. The European Central Bank’s deposit facility rate has stood at 2.50% since Sept. 16. In ZEW’s survey, 72.2% of respondents expected higher short-term euro area interest rates over the next six months. That figure describes analysts’ expectations, not a decision by the central bank.
The ECB has said it will decide rates at each meeting without committing to a path. Its next policy decision is scheduled for Oct. 29.
