Euro Pressured after Survey Says German Consumer Confidence to Weaken
German consumer confidence will diminish in May as
rising energy costs weaken household purchasing power, the German GfK
institute said today. The May GfK consumer confidence index is set to
drop to 5.6% from a revised 5.8% in April. Markets had expected a May
reading of 5.9%, based on the median forecast by a team of economists.
Rising energy prices were seen weighing on
households’ spending power as inflation creeps up on Europe threatening
to torpedo economic recovery. Inflation fears
have seeped to the surface in Germany as property prices rise and
monetary policy remains loose. Rising inflation in Germany could have
widespread implications for the rest of the Eurozone given Germany’s
size and influence in the 17-nation bloc.
The Euro weakened somewhat versus the US Dollar
following today’s GfK release. As of this report the single currency was
trading back down towards multiday consolidation levels in the 1.3100
area.
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