THE TAKEAWAY: German IFO business climate survey rises to 104.2 -> Survey further confirms expectations for a recovery -> Euro continues to rally
The IFO German business climate survey rose to a seven month high in January, as the survey of expectations showed a positive result for the first time in eight months. The business climate survey was reported at 104.2, higher than an expected 103.0 result and better than December’s 102.4 survey. The expectations survey rose to an unexpected 100.5, while the business climate survey was reported at 108.0.
The improved German expectations survey was not a surprise to the market following yesterday’s improved PMI’s in the Euro-zone and Germany. The PMI release pointed to the beginning of a recovery in the Euro-zone in 2013, confirming similar comments made recently by ECB President Draghi. However, it is possible we may see another quarter of negative growth in Q4 2012, before the predicted recovery begins. Signs of Euro-zone economic growth are Euro positive.
Because of the expectations for a positive reading, the IFO survey only had a small effect on Euro trading. EURUSD rose 80 points to 1.3440 ahead of today’s ECB release of data for expected 3-year LTRO repayment next week, and the final 10 points of gain were taken following the IFO release. Resistance might now be seen by a 1-year high near 1.3500, and support could be provided by a previous resistance around 1.3400.
EURUSD Daily: January 25, 2013
Chart created by Benjamin Spier using Marketscope 2.0
-- Written by Benjamin Spier, DailyFX Research. Feedback can be sent to firstname.lastname@example.org .