- Prior 88.1; revised to 88.0
- Current conditions index 85.6 vs 85.8 expected
- Prior 85.6
- Expectations index 89.7 vs 90.5 expected
- Prior 90.6; revised to 90.5
The headline reading is softer than estimated with the current conditions and expectations index also missing on estimates. The decline in German business sentiment towards the end of the year puts a dent on the recent optimism surrounding economic expectations, with the headline estimate being the softest since May.
That being said, there is still hopeful optimism looking to next year amid more expansive fiscal policies. So, there is that.
In any case, all of this will not do much to change the ECB outlook for the time being. The central bank is still well expected to keep key interest rates unchanged this week and will continue to do so for the foreseeable future in the early stages of 2026.
As things stand, market players are not expecting much of anything from the central bank. That especially since the euro area economy remains relatively fragile and vulnerable, while sticky inflation in Germany especially continues to prove difficult to tackle and allow for flexibility in terms of easing monetary policy further.
EUR/USD is trading around 1.1717 currently, down around 0.3% on the day. The low earlier touched 1.1704 with the dollar keeping firmer across the board in European morning trade thus far. But in the case of EUR/USD, we do have large option expiries at 1.1700 and 1.1750 keeping things in check and placing a bit of a bookend to price action before we get to US trading later.
