German Ifo data better than expected


EURUSD, Daily                

German Oct Ifo index stronger than expected at 110.5, up from 109.5 in the previous month. The better than expected number ties in with the strong PMI readings for Germany yesterday and the fact that the expectations index jumped to 106.1 from 104.5 and against expectations of a marginal rise to 104.6 is particularly encouraging. The German recovery at least remains intact and even though the French national business confidence numbers earlier came in weaker than hoped, the readings at company level were not that bad, so it still seems the overall Eurozone recovery continues as planned, despite the Brexit scenario adding uncertainty and despite the fact that the weaker Pound has lifted comparative competitive measures in favour of the U.K.. German Ifo diffusion index rose to 13.8 from 11.9 in the previous month, with the manufacturing reading improving to 16.7 from 13.3 and construction confidence rising to 10.2 from 9.3. Confidence in wholesale and retail trade meanwhile remains in positive territory, but fell back somewhat from September. Overall though, the improvement to the highest reading since 2014 in the Ifo and the fact that optimists outnumber pessimists across all sectors shows that the recovery is broadly based and remains intact.

EURUSD ticked up to day highs at 1.0892 and EURGBP touched 0.8908. US consumer confidence, the Case-Shiller US home price index and speeches from Governor Carney and President Draghi still to come later today.

Janne Muta

Chief Market Analyst

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