German Business Climate Drops to 2.5 Year Low
THE TAKEAWAY: IFO Institute’s business climate survey drops to 102.7, below expectations -> Expectations survey reaches 2.5-year low -> Euro is trading higher today
The German business climate survey provided by the IFO Institute reached a new 2.5-year low in August as businesses’ expectations for the future worsened. The business climate was reported at 102.3, worse than expectations for 102.7 and down from July’s revised survey result of 103.2. Any survey result above 100.00 indicates a positive outlook.
The current assessment survey beat expectations in August and only fell to 111.2 from a revised 111.5. However, the negative expectations for the future fell more than expected to 94.2 from a 95.5 revise survey in July.
The German economy is suffering from the Euro debt crisis and growth slowed to 0.3% in the second quarter. However, steps to relieve suffering Euro countries, like easing the bailout conditions on Greece or the European Central Bank buying Spanish and Italian bonds, are currently being considered by German and other European leaders and will not necessarily be implemented.
The surveys act as indicators of the performance of the economy, therefore a worse than expected survey should be Euro-negative. However, the Euro did not react to the worse than expected business climate survey and is actually trading higher against the US Dollar in today’s session, currently trading near 1.2525. A three month downward trend channel could provide support near 1.2480.
EURUSD 15-minute: August 27, 2012
“Meet the DailyFX team in Las Vegas at the annual FXCM Traders Expo, November 2-4, 2012 at the Rio All Suite Hotel & Casino. For additional information regarding the schedule, workshops and accommodations, visit the FXCM Trading Expo website.”
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.