German Confidence Falls To Lowest In 15 Years

Source: DailyFX

German investor confidence fell to minus 52.4, which was the lowest in more than fifteen years. The gauge fell from minus 41.4 in May and far below economists expectations of minus 42.5. Accelerating inflation has weighed on investor confidence and the outlook for the economy. Record oil and food prices continue to diminish consumerʼs purchasing power, and in turn domestic demand. In a separate report the European trade balance turned to a surplus of 2.2 billion from a deficit of 1.5 billion, as exports rose 6.2% in April. Demand from emerging markets China and Russia rose 16% and 21% respectively, and continues to offset declining U.S. orders. The strong trade report supports ECB President Trichetʼs contention that growth in the region is sustaining and that the focus for the central bank should remain on price stability. Therefore, expectations are that the MPC will raise the overnight interest rate at their next meeting as they try and curb the fastest rate of inflation in 16 years.