Tuesday's session was marked by ZEW Economic Sentiment figures. The ZEW Indicator of Economic Sentiment for Germany has increased slightly in January 2017. The index has improved by 2.8 points compared to December, now standing at 16.6 points. "The slight increase of the ZEW Indicator of Economic Sentiment is mainly due the improved economic situation across European countries. The fairly good preliminary figures recorded for the development of the German GDP last year, as well as for the industrial production of the eurozone in November 2016, came as a surprise to many. This improvement in expectations can thus also be seen as a leap of faith for 2017," comments ZEW President Professor Achim Wambach,PhD.
As a result, the current economic situation in Germany has improved significantly. The index has climbed 13.8 points to a current reading of 77.3 points. This value was last exceeded in July 2011. Financial market experts’ sentiment concerning the economic development of the eurozone has also improved, with the respective indicator increasing by 5.1 points to a reading of 23.2 points. The indicator for the current economic situation in the eurozone climbed 7.9 points to a level of minus 0.4 points in January 2017.
On Wednesday, from Eurozone CPI figures were published. Euro area annual inflation was 1.1% in December 2016, up from 0.6% in November. In December 2015 the rate was 0.2%. European Union annual inflation was 1.2% in December 2016, up from 0.6% in November. A year earlier the rate was 0.2%. The largest upward impacts to euro area annual inflation came from fuels for transport (+0.21 percentage points), vegetables (+0.07 pp) and heating oil (+0.05 pp), while gas (-0.10 pp), telecommunications (-0.05 pp) and personal care products (-0.04 pp) had the biggest downward impacts.
Focus of the Thursday's session was on ECB interest rate decision and the following Press Conference. The European Central Bank kept its super-easy monetary policy unchanged as expected on Thursday, maintaining extraordinary stimulus to aid a tepid recovery in growth after nearly a decade in the doldrums. Following are highlights of ECB President Mario Draghi's comments at a post-policy meeting press conference.
"There are no signs yet of a convincing upward trend in underlying inflation.Headline inflation is likely to pick up further in the near term, largely reflecting movements in the annual rate of change of energy prices. However, measures of underlying inflation are expected to rise more gradually over the medium term. A very substantial degree of monetary accommodation is needed for euro area inflation pressures to build up and support headline inflation in the medium term. If warranted to achieve its objective the Governing Council will act by using all the instruments available within its mandate."
This week markets will be looking at:
French Flash Manufacturing PMI/French Flash Services PMI (Tuesday 9:00)
German Flash Manufacturing PMI/German Flash Services PMI (Tuesday 9:30)
German Ifo Business Climate (Wednesday 10:00)
M3 Money Supply (Friday 10:00)
