Tuesday starts with mixed signals from Germany: While the Consumer Price Index (CPI) for January exactly meets expectations, the ZEW economic expectations disappoint much more than feared. The euro and European indices give way slightly, while gold and Bitcoin hardly react. Here are the details and initial market assessment.
German CPI January: Exactly in the Target Corridor
The Consumer Price Index (CPI) for Germany in January stands at +0.1 % m/m and +2.1 % y/y, exactly in line with analyst forecasts. This keeps inflation in the eurozone's largest economy stable within the ECB's 2.0 % target range. After two months of slight declines, this is another indication of a controlled cooling without a strong drop in inflation. Shelter costs and services remain stubborn, which is likely to keep the ECB cautious. The euro showed little movement against the dollar after the figures (EUR/USD ~1.184), and the market reaction is correspondingly subdued.
ZEW Economic Expectations February: Strong Setback
Much more disappointing are the ZEW economic expectations for February. After a surprisingly strong 59.3 points in January (well above expectations), analysts had forecast a further rise to 65.8 points. In reality, there was a decline to just 58.3 points – even lower than the previous month. This is a clear damper on hopes for a quick recovery in the German economy. The index remains above the important 50-point mark (expansion), but the momentum is gone.
The market reaction is nevertheless subdued: The DAX initially reacted slightly positively after the CPI data, but threatens to turn after the ZEW figures and is giving back part of the moderate morning gains. It is currently still showing a small gain of 0.12 %. The euro is losing slightly against the dollar (EUR/USD at ~1.182). Cyclical sectors and bank stocks in particular are affected, while defensive titles (utilities, health) are holding up. The decline signals that investors continue to view the German economy with skepticism – despite the stable inflation data.
Market Reaction & Outlook
Today remains thinly traded: No major US data, Asia largely closed (Lunar New Year). The focus is therefore shifting completely to the FOMC meeting minutes expected tomorrow. A dovish tone (discussion of earlier rate cuts, growth concerns) could trigger risk-on and support the euro, European indices and gold. If the Fed remains hawkish, pressure on the euro and risky assets is likely to continue.
Gold continues to trade just above 5,000 USD, Bitcoin is hovering around 66,800–67,200 USD – both are waiting for the next impulse. Anyone who wants to follow the price developments live will find a neutral overview here of established platforms that cover almost the entire range of assets: To the Trading Platform Overview.
