A choppy session for major currencies. Sterling initially weakened following the release of February labour market data but it is now the Euro which is underperforming on the back of weak business confidence data. The forward looking German ZEW index of economic sentiment tanked to -8.2 in April, its lowest since November 2012. The fall in German business confidence from lofty levels has been sharp and brutal, seemingly driven by concerns about the potential impact on German exports from a trade war, more centrist German economic policies and the Euro’s slow but sustained appreciation. This slump in sentiment is being echoed across the Eurozone with the ZEW index of economic sentiment falling to 1.9 from 13.4 in March. These trends, as well as still timid inflation, are likely to reinforce the European Central Bank’s rather cautious view on monetary policy.
