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Trading the German IFO survey result should be relatively straightforward, as surprises in either direction tend to lead to proportional moves in the EURUSD. Though volatility following the survey is typically limited, modest price extension nonetheless allows for post-news profits. Recent German ZEW data suggests that current consensus estimates of a 108.4 print may prove optimistic, leaving a faint fundamental bias on otherwise rangebound EURUSD trade.    Discuss this.

Trading the News: Germany IFO-Business Climate

What is Expected
Time of release:         04:00 EST, 08:00 GMT 6/22/2007
Primary Pair Impact : EUR/USD
Expected:                  108.4
Previous:                   108.6

How To Trade This?

Trading the German IFO survey result should be relatively straightforward, as surprises in either direction tend to lead to proportional moves in the EURUSD. Though volatility following the survey is typically limited, modest price extension nonetheless allows for post-news profits. Recent German ZEW data suggests that current consensus estimates of a 108.4 print may prove optimistic, leaving a faint fundamental bias on otherwise rangebound EURUSD trade.

Given that markets are likely gearing up for an IFO disappointment, any positive surprise would almost certainly spark a solid EUR bid. If numbers come in firmly above consensus forecasts, the trader may look to go long the EURUSD. Maximum losses on the trade shall be limited to the pair’s preceding swing low, while initial profit targets should be the same distance away to the topside.

A negative IFO print would arguably provide less price extension, but a virtually empty North American calendar leaves the German survey as the sole major event risk through Friday trade and may nonetheless provide reasonable follow-through in price If the Business Climate number comes in firmly below consensus forecasts, the trader may look to go short the EURUSD on confirmation of a 5-minute tumble. Stops shall be set above the pair’s preceding swing-lows, while limits should be eyed at the same distance away to the downside.

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