TAKEAWAY: German business climate defies expectations to reach 6-month high -> Shows resilience against global growth concern -> EUR/USD remains locked in 12 day range
Germany’s business climate improved for the sixth straight month, hitting a new high of 109.9. The survey, which is conducted by the IFO Institute and based on 7,000 executives’ responses, beat analysts’ estimates of a drop to 109.5 from last month’s 109.8 level. The IFO’s current assessment survey also beat estimates and rose to 117.5 as did the expectations survey which stayed level with the previous month at 102.7.
The IFO survey is one of the best indicators of business sentiment in Germany; and these positive results combined with this month’s positive ZEW survey show that world economic concerns are not affecting German outlook. German economic indicators are the most important out of all the European countries, as Germany makes up one quarter of the Eurozone’s GDP.
Professor Hans-Werner Sinn, head of Germany's IFO Institute, said he was surprised that Germany’s retail sector maintains a positive outlook despite higher inflation, but expects the German economy to improve from quarter to quarter in 2012.
EUR/USD jumped following the better than expected business climate, but still hasn’t broken out from its week long 1.3215 resistance level. EUR/GBP also rose following the release, setting a new daily high. Many analysts refrain from suggesting a directional bias for EUR/USD until it breaks out from its 12 day, 200 point range.
