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The DAX has spent much of the last 24 hours digesting Tuesday’s awful ZEW economic sentiment figures, the weakest since January 2013. This is another example that European Central Bank president Mario Draghi will need to look at helping to weaken the euro.
For many years, Germany has benefited from the average economic strength of the eurozone countries dragging down the power of the euro. As a primarily export driven economy, this deflated value has encouraged overseas buyers because German manufactured goods have appeared cheap. Germany still remains the economy most likely to drag the rest of the eurozone out of recession, and as such, ensuring its competitiveness is a must.
The Germany 30 has sat in negative territory all morning, weighed down by poor performances from RWE AG, Commerzbank AG, Siemens AG and Deutsche Boerse AG. RWE AG has seen its output of electricity dramatically drop by 17% in the first quarter, and the weak energy sector sentiment has been passed on to Siemens.
Tomorrow will see the release of German quarterly preliminary gross domestic product figures and eurozone inflation. This could be another case of bad news (continuing weakness in the inflation level) being interpreted as good news as it brings ECB changes one step closer.