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German ZEW sending more signs of caution - ING

FXStreet (Łódź) - Carsten Brzeski from ING comments on the German ZEW numbers published in the European morning, suggesting that the results pointing to a continuing downward trend mean that investors are not so confident about the effectiveness of ECB's latest measures.

Key quotes

"Today’s ZEW index provides more food for the pessimists. Particularly another sharp correction of the current assessment component is remarkable."

"However, let’s not forget that the predictive power of the ZEW index has to be taken with more than a pinch of salt. For example, the current assessment component increased throughout the second quarter, while growth actually turned out to be negative."

"Currently, the German economy seems to float at least between three worlds."

"One is the solid domestic economy with employment at record high levels, wage increases and booming construction sector."

"The other world is the increased uncertainty stemming from geopolitical tensions, the Ukraine crisis, the economic impact from sanctions and possible trade retaliations and the general slowing down of emerging market economies."

"Finally, the third world seems to be a strong US economy with increasing appetite for business investments."

"Two out of these three worlds bode well for German growth, one clearly does not. It is still too early to tell which of these opposing trends will eventually predominate."

"In our view, the solid fundamentals, domestic demand and exports to the US still form a substantial safety net against widespread fear and a period of economic drought in Germany."

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