Risk Assets Rally
The dollar weakened across the board in the European session as risk assets rallied. The German ZEW was strong, with the economic sentiment index printing -21.6 (vs. expectations of -49.4). The current situation index improved to +28.4. A ZEW economist said that ECB liquidity, lower yields and better US data boosted sentiment. Eurozone periphery spreads versus Germany tightened and equity markets were trading in the black at the time of writing. Both Spanish and EFSF auctions were relatively successful. The Euro largely overlooked last night’s news that the EFSF was downgraded by S&P, and it pushed higher in Asia.
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UBS Investment Bank