THE TAKEAWAY: German IFO business climate survey rises to 101.4 -> Surprise rise in sentiment may predict economic rebound -> Euro erases losses
The German economy business climate has rebounded from a 2.5 year low, and the climate remains positive despite the pressures of the Euro crisis, according to the IFO indicator.
The IFO business climate indicator for November was reported at 101.4, beating expectations for a negative indicator at 99.5, and higher than last month’s record low at 100.00. Current assessments are decisively positive at 108.1, up from October’s revised 107.2 indicator; meanwhile the survey for expectations continued to be negative at 95.2, but significantly higher than last month’s 93.2 IFO indicator. Any survey result above 100.00 indicates positive sentiment.
German economic expansion reached a three quarter low at 0.2% in Q3, confirming last month’s IFO business climate indicator, which showed neutral sentiment at a record low. The IFO survey could be seen as an indication of an upcoming rebound in the German economy.
Following the release of the better than expected survey results, the Euro climbed higher in currency markets. EURUSD briefly rose beyond the key 1.2900 figure. The key 1.2900 figure might continue to provide resistance, as it is the 23.6% retracement of the rally from July through September. Support could be provided by a previous support area around 1.2824.
EURUSD 15-minute: November 23, 2012