German Business Sentiment Wanes but Fails to Sink the EUR

Following last week’s PMI numbers, the German economy was back in focus at the start of the week.

Business Sentiment

Business sentiment figures from Germany were in focus early in the European session.

In July, the Ifo Business Climate Index fell from 103.7 to 101.2, versus a forecasted decline to 103.6.

According to the July survey,

• Sentiment towards current conditions improved, with the current conditions sub-index rising from 99.7 to 100.4.
• Concerns over the outlook weighed, however, with the business climate sub-index falling from 101.7 to 100.8.

At sector level,

• The index in manufacturing fell due to a marked decline in optimism in companies’ expectations. It was a 4^th consecutive monthly decline.
• By contrast manufacturer assessment of current conditions hit the highest level since Aug-2018.
• There was a similar trend across the services sector, with the business climate sub-index weakening, while firms were more satisfied with their ongoing business.

Market Impact

Ahead of today’s inflation figures, the EUR had risen from a pre-stat and current day low $1.17635 to a pre-stat and current day high $1.18001.

In response to today’s stats, the EUR fell to a post-stat low $1.17674 before rising to a post-stat high $1.17980.

At the time of writing, the EUR was up by 0.20% to $1.17968.

Next Up

New home sales figures from the U.S. We don’t anticipate any EUR sensitivity to the data, however.