ECB left the rate unchanged, despite Eurozone inflation continues to point upwards. German Final CPI jumped 0.7%, up from 0.1% a month earlier. This marked the indicator’s strongest gain since March 2016. Eurozone Final CPI also impressed, with a gain of 1.1%, compared to 0.6% in the previous release. Meanwhile, investor/analyst expectations improved in January, although the markets were hoping for more. German ZEW Economic Sentiment rose to 16.6, shy of the forecast of 18.9. Eurozone ZEW Economic Sentiment jumped to 23.2 points, short or the estimate of 24.2.

These indicators point to optimism about economic conditions from investors and analysts, but the dark clouds of political turmoil are plain to see. Elections in France, Germany and the Netherlands with continuing uncertainty in Italy will put pressure on the EUR. The hard stance on Brexit could also hurt the Union’s growth as it it hard to quantify what will be lost if there is not even a back up deal in place when Britain leaves. Brussels is using this as a threat to any want away member to avoid a run for the exit, but it might end up causing more damage in the long run to remain inflexible. EUR droppeed to 1,06 during the monetary poilicy released at the same time as US (possitive) housing & jobless claims report.
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