NEWS / Foreign Exchange

German ZEW economic sentiment might continue to improve in April

German ZEW economic sentiment might continue to improve in April. Provided German harmonized CPI data remain unrevised, EMU HICP is likely to be confirmed at 1.9% yoy. However, the risk is more on the upside.

The flash estimate had put HICP inflation in the euro area in March at 1.9 % yoy. This result is likely to be confirmed. However, whereas the French figures were in line with our forecast, the Dutch results turned out somewhat higher than expected and the preliminary Italian results were revised up. The risk to our forecast is therefore on the upside. The respective mom increase is quite high at about 0.7%, mainly for seasonal reasons, as prices for clothes increase when the spring/summer fashion enters the shops. In addition, energy prices rose in March.

In April, German ZEW economic sentiment might improve about as much as in March. The ifo business expectations in the German business sector and the DAX performance index have both gone up. The yield spread has widened due to the increase in longterm interest rates. However, the US ISM index has deteriorated, the euro has appreciated and the crude oil price has risen again.

In March, French consumer spending is likely to have stabilized at least. As usual, the EMU trade balance is expected to have improved in February.