THE TAKEAWAY: IFO business climate survey at 102.4 in December -> Higher survey contrasts Bundesbank cuts to growth forecasts -> Euro trading slightly higher
German companies’ assessment of the business climate has climbed to the highest level in 5-months according to the IFO institute. The main business climate survey for December was reported at 102.4, slightly higher than expectations for 102.0 and better than last month’s 101.4 survey. The current assessment survey was reported at 107.1, lower than the expected 108.0. The expectations survey saw a significant climb to 97.9 from last month’s 95.2 survey, it was also better than the expected 96.4 survey result.
An IFO survey result above 100 indicates more positive responses than negative ones among the more than 7,000 businesses surveyed. The business climate survey has remained above 100 since March of 2010. IFO’s Sinn said the optimism is justified given the global situation.
In contrast to the IFO optimism, the Bundesbank recently cut its 2012 growth forecast to 0.7% in 2012 and to 0.4% in 2013, which was down from a previous forecast of 1.6%. The Euro-zone debt crisis has placed a lot of pressure on the German economy, and Euro investors are looking for signs of faster growth in the Euro-zone’s biggest economy.
The Euro climbed slightly higher on the better than expected survey results. EURUSD is currently trading around 1.3250, and the pair could find resistance at a previous high of 1.3284. Support could be provided by a previous resistance around 1.3154.
EURUSD Daily: December 19, 2012