Morning Forex Fundamental: EUR

Morning Forex Fundamental: EUR

'The fundamentals of the German economy are healthy and that should help other European countries grow. But there's still a risk that the debt crisis will flare up again.' - Aline Schuiling, senior economist at ABN Amro Bank NV

Confidence among German investors increased more than initially was expected in August, reaching a five-month high, as Europe's powerhouse helped pull the whole region out of its longest-ever recession. The Mannheim-based Center for European Economic Research, or ZEW, posted a monthly report, saying a gauge of business confidence picked up to 42.0 this month, recovering from a 2.2 points drop in July, when index reached 36.3. Analysts have expected a reading of just 39.9 points. Any level above 0.0 indicates optimism, while a reading below reflects pessimism. A measure of current situation reached 18.3 in Augusts, up from 10.6 a month earlier.

Earlier this month a bunch of economic releases showed that German industrial production soared 2.4% in June, while factory order regained momentum as well, posting a 3.8% increase in June. Germany's manufacturing output accelerated to 50.7, reaching its highest in 18 months. Later this week German second-quarter preliminary GDP is due to be published, which is expected to show a 0.75% rise, while economists projected growth of 0.6%. According to the European Commission, Europe's largest economy is set to expand by 0.4% and 1.8% in 2013 and 2014, respectively. The improvement in German economy, paired with signs of a pickup in the U.S. and China is an evidence of a global economic recovery.