EURUSD Shrugs Off IFO Figures as It Continues to Push Higher
EUR Talking Points:
- EURUSD traded in a wide range this morning and continued to push higher despite German IFO figures coming in mixed
- Business climate remains stable and current assessment improves, but expectations come in lower than expected which reinforces concerns about future growth
Business climate for the month of June was 97.4, in line with expectations but down from 97.9 in the previous month. Current assessment came in better than expected at 100.8 (Exp. 100.3) but expectations about the future failed to reach expectations of 94.6, coming in at 94.2.
These figures reinforce that Germany continues to face difficult economic conditions, with unemployment rising in May for the first time in 5 years and a stagnant growth which has faced periods of contraction. Despite June German manufacturing PMI being higher than expected and having improved from the previous month, the figure was still below 50 which indicates contraction meaning that the manufacturing industry, which is a big part of Germany’s export-led economy, continues to slow down, albeit at a slower rate.
PRICE CHART: EURUSD ONE-MINUTE TIME FRAME (INTRADAY)
The Eurozone continues to face complicated times with growth and inflation both declining. The ECB has indicated that if economic conditions continue to worsen we could see extended period of monetary easing with the possibility of continued negative rates.
Risk in the Eurozone has continued to increase as the EU finds itself with many open fronts, including ongoing Brexit concerns, Italy’s threat of a parallel currency to overcome its budget indiscipline, and the stalled talks with Switzerland over their various trading accords. It seems like more relationships between the member countries and the Central Government are getting strained and deteriorating sentiment in a moment when the EU finds itself with most of its top jobs up for grabs.
Eurozone Debt Crisis: How to Trade Future Disasters – Martin Essex, MSTA, Analyst and Editor
KEY TRADING RESOURCES:
- Just getting started? See our beginners’ guide for FX traders
- Having trouble with your strategy? Here’s the #1 mistake that traders make
- See our Q3 forecasts to learn what will drive FX the through the quarter.
--- Written by Daniela Sabin Hathorn, Junior Analyst
To contact Daniela, email her at Daniela.Sabin@ig.com
Follow Daniela on Twitter @HathornSabin
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.