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Sentiment Positive Before ECB Meeting

ByBenzinga
AuthorBenzinga
Published 07/31/2013, 08:36 AM
Updated 05/14/2017, 06:45 AM

The euro brightened on Wednesday morning after new data supported the hope that the eurozone's longest post war economic contraction is nearly over. The common currency traded at $1.32 as investors began to speculate about the European Central Bank's policy meeting on Thursday in light of the new positive data.

Bloomberg reported that the European Commission's measure of the bloc's economic sentiment rose to 92.5 from 91.3.

This marks the third rise in economic sentiment in as many months, which could mean businesses are becoming more willing to invest and consumers more likely to spend. The figure was in line with several other economic indicators coming out of the region recently which have all pointed towards recovery.

However, many economists are cautioning investors not to celebrate too much, since although the economic sentiment rose for July, it is still far below the levels reached pre-economic crisis. In the 90's, the bloc's economic sentiment was averaging around 100.0; so although July's reading shows improvement, the increased spending will likely provide only a small jump start to recovery.

The reading came just ahead of the European Central Bank's monthly policy meeting, set to take place on Thursday. Although the data gives the bank a bit of room to breathe, the fact remains that sky high unemployment and a disconnected credit system means the bank still has work to do.

Most agree that the ECB will not make any major policy changes at this month's meeting, but there is speculation that the bank will eventually lower interest rates again from 0.5 percent to 0.25 percent.

BY Laura Brodbeck

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