The German Zentrum für Europäische Wirtschaftsforschung (ZEW) Economic Sentiment Index amalgamates the opinions of 350 institutional investors and analysts on the future performance of the German economy in the upcoming six months. Economists feel optimistic when the Germany ZEW Economic Sentiment is above zero, and pessimistic when the index crosses below the zero line.
Why is it important?
Germany is the world’s fourth largest economy and Europe’s absolute leader in terms of GDP. The exchange rate of Euro is tightly connected to the performance of the German economy. Not only the Germany itself contributes a lot to the pan-European market. Germany is also an indicator of the global economic trends and their expansion into Europe.
German economy, however, is not the only one that is considered. Experts include their opinions on European, American, British and Japanese economies, as well.
Practical application
A higher than expected reading should be taken as bullish for the EUR, while a lower than expected reading should be taken as bearish for the EUR.
