EU German ZEW Economic Sentiment 08/18/09

5:00am (NY Time) EU German ZEW Economic Sentiment  Forecast 45.2  Previous 39.5
ACTION: N/A  EUR/USD

I normally don’t trade this release but I feel it is important to mention it today since this report has been gaining popularity by traders as Germany is one of the biggest economies in the Euro Zone; therefore better German economy means better European economy as a whole.

The ZEW Economic sentiment is a survey of around 350 German institutional investors and analysts on their opinion of the economic outlook for Germany in the next 6 months. This report is considered as a leading indicator, which reflects the sentiment of these professionals, but not the actual health of the economy.  But since these professionals are highly informed in their respective fields, this indicator is highly regarded by traders as early signs of market trend.

Since this indicator is calculated based on the difference of the percentage of analysts feeling optimistic versus analysts feeling pessimistic, a positive number generally means that the optimism outweighs pessimism.  For instance, if 30% feel optimistic, 40% feel pessimistic, and 30% feel indifferent, then the indicator would be a -10. 

I would be looking at EUR/USD for direction, but other pairs to look at could be EUR/GBP and EUR/JPY pairs, depending on which pairs have the most potential for movement.  I have no trigger for this report, but since we are getting close to that 50% mark, having over 50% of analysts feeling optimistic over the future seems to be a strong bullish signal for the EUR.

UPDATE: As this release came out much better than expectation, my entry of Sterling entered around UK CPI time turned into profit immediately, and I took that chance to get out and banked 40 pips.  But by judging the immediate market reaction for the EUR/USD pair, I decided it is best not to enter a trade for the lack of momentum.  So this is a no trade.

Related posts:

1. Market Economic Outlook as of 10/12/09
2. Forex Fundamental Economic Outlook 08/10/09
3. Forex Plan For US ISM Manufacturing PMI 07/01/10
4. UK Retail Sales m/m 08/20/09
5. US ISM Non-Manufacturing PMI 09/03/09
6. Forex News Trading US ISM Manufacturing PMI 01/03/2011
7. UK MPC Meeting Minutes 08/19/09
8. UK Manufacturing PMI 09/01/09
9. Forex News For UK Retail Sales September 15, 2011
10. US Core Retail Sales m/m 11/16/09

Tagged as: bullish signal, economic outlook, economic sentiment, economy, EUR, euro zone, european economy, German ZEW Economic Sentiment, Germany, indicator, institutional investors, pips, sentiment, Sterling, UK, USD, ZEW