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Eurozone Sentiment Increases

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The month of May has seen an improvement in Eurozone sentiment indicators across the board according to a range of data just released. Consumer Confidence in the Eurozone is now reading at -7.1, this is the number that the markets had for the month and it represents an increase in confidence are evidenced by a pick up from April’s -8.6 level.

The Business Climate Indicator for the month is now showing 0.37, this is up from a revised April reading of 0.28 and narrowly comes in ahead of the 0.30 consensus estimate for the month.

Industrial Confidence has also improved, the number just released shows a pick up from -3.5 in April to -3.0 this month, markets had in fact expected a further fall to -3.9 on this months reading.

The Eurozone Services Sentiment Indicator held no surprises as it came in at the expected reading of 3.8, this is up on the April print of 3.5.

Finally, the overall Economic Sentiment Indicator has also shown some improvement on the month, this key number is now 102.7, strongly up from the prior reading of 102.0 and easily beating the 102.2 level anticipated by the market.

Eurozone confidence figures are gradually recovering, albeit from a low base to begin. The prospect of the European Central Bank (ECB) waking up and taking some definitive action has provided some much needed encouragement to business and consumers across the Eurozone. Rhetoric from ECB Governing Council members, particularly president Mario Draghi, during the month of May strongly points towards to concrete monetary policy action emerging from next week’s ECB policy meeting. Markets have priced in cuts to both the Refinance Rate and the Overnight Deposit Rate, the former will make cheaper funds available across the Eurozone while the latter rate will encourage an increase in liquidity.

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