Positive consumer confidence in Germany bucks eurozone trend

Consumer confidence in Germany will increase in February from a 7-month low, suggests the GFK survey.Positive consumer confidence in Germany bucks eurozone trendThe survey stated 5.8 marginally above expectations of 5.7 and better than January’s revised 5.7 survey result.

The news will come at a good time as the German economy has been feeling the brunt of the European debt crisis and only grew 0.7% in 2012, down from 3.0% growth in 2011.

The European Central Bank has predicted that the eurozone economy will start its recovery later this year, which should support activity in Europe’s largest economy.

A jump in German GDP growth would lead to a Euro rally. Despite the news, the Euro has not moved significantly and instead fell below 1.3450 in trading against the Greenback. EUR/USD set a new 11-month high in Forex trading on Friday at 1.3479, which may now provide resistance.

As we look to the rest of this week it’s hectic in terms of US data releases keep investors entertained however there should be little to harm the optimistic attitude to risk over coming days.

Key events include the US January jobs report (forecast +160k) and Fed FOMC meeting (no change expected) alongside manufacturing confidence and Q4 GDP.

Finally, Sterling has fallen further and was not assisted by the larger than projected fall Q4 GDP exposed last week which now genuinely increases the possibilities of a ‘triple dip’ recession.

The lack of room on the fiscal front suggests the possibility for more forceful Bank of England monetary policy particularly under the watch of a new governor and potentially further GBP weakness.

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