German ZEW Survey Hits 8 Month Low Supporting Call for Unchanged Rates in September

With the subprime debacle, it is hardly surprising to see the German ZEW survey fall below expectations in the month of August. The Eurozone economy as a whole, particularly Germany has been and will continue to be vulnerable to financial sector losses, which is part of the reason why analyst sentiment has deteriorated.

This supports the call by some economists for the ECB to leave interest rates unchanged next month. We haven?t heard much from ECB President Trichet over the past few days and we are sure that he is closely watching the markets for signs of stability. The Euro has traded in a tight range over the past 48 hours. Since only current account and industrial orders are due for release tomorrow, the Euro could very well remain in a range. Meanwhile the Swiss trade balance was also weaker than the prior month, but that has not had much of an impact on the Swissie.