Europe Ahead: European confidence to continue its rally for the eighth consecutive month

Today, the euro area will announce confidence data in a week that
lacked important fundamentals from the euro zone, where the main
highlight was on UK data.

European economic confidence is predicted to resume its advance for
the eighth month in January despite the escalating debt woes in the 17
countries using the common currency.

In December, economic confidence rose to 106.2, the highest since
October 2007, while this month it is estimated to continue rising to
106.9.
Consumer confidence probably inched up to -11.2 in January from -11.4
in December, while business climate indicator surged to 1.34 from
1.31.

The advance is perhaps led by the largest economy in the euro area,
Germany, as the European superpower economy continue to lead recovery
in the region, where so-called peripheral nations are striving to trim
budget deficit.

Germany expanded at an annual base of 3.6 percent in 2010 compared
with 4.7 percent contraction in 2009, yet the Bundesbank expects
Germany's growth to slowdown to 2 percent in 2011.

German business confidence rose to 110.3 in January from the revised
109.8 in December, factory orders improved and investor confidence
edged up to 82.8 in January from 82.6 and economic sentiment gauge
increased to 15.4 from 4.3.

This week, data released showed that PMI manufacturing in the euro
zone edged down 56.9 in January from 57.1 in December, while the
services index expanded to 55.2 from 54.2.

Accordingly, industrial confidence is predicted to soar to 5.0% in
January from 4.0 and services confidence to rise to 10.0 from the
prior 9.8.

Also, confidence has been regained, to some extent, after successful
bond selling auction by the EU yesterday to raise funds for the Irish
85 billion-euro package.

The euro is rising for the third consecutive week to the highest level
in two months against the dollar on hopes the region will recover this
year.

Trichet said in the press conference following January's rate decision
that the rise in inflation is temporarily and prices will stabilize
over the medium term.
Speculations are now rising that the ECB will raise interest rate
before other major economies.
Source: Fxstreet.com