- German IFO data confirm the slowdown in the economic recovery
- EUR / USD hovering over 1.1750
- Luis de Guindos recommends a higher macroeconomic pfor the euro area
The German IFO figure has confirmed what we already knew: the pace of economic recovery in the second half of the year has lost some momentum. Business expectations by three consecutive months, has fallen below 100 again for three consecutive months, with business climate also falls below 100 and is weaker than expected. In addition to the previous two months, it is still the highest figure since March 2019 and thus continues to show a good picture of German business conditions.
The current assessment has been able to exceed expectations and last month’s reading, marking its highest level since April 2019 and 7 consecutive months. Rising current conditions and declining future expectations suggest that growth is expected to improve in the current months, but the longer-term outlook is weakening.
The decline in IFO data is not really a surprise, given the large number of previous opinions that showed a decline in morale in the recovery. This is probably the reason for the reaction Euro is still quite muted, together EUR /USD pulling back a bit before you marked the new daily high of 1.1760, which is in line with yesterday’s high. I think traders are waiting for new information that could affect the currency, either through more central bank review or covid-19 news, and so IFO data has only confirmed the already general theme of slower growth and not actually provided new information to confirm direction.
The fight for bulls continues to consolidate above 1.18, which has been rejected a few times in the last month. The false test at the beginning of August only led to a new sales pace, which has now generated strong resistance, but the couple has managed to break out of the key range observed in recent days (1.17-1.1738). may be a sign of further profits. We also have a 50-day moving average concentrating at 1.18, so it is likely to remain a difficult cracking area, but if it is exceeded, bulls are likely to see a boost to 1.19.
EUR / USD per day schedule
We have had too Luis de Guindos, Vice-President of the ECB this morning, and its main message is that the central bank may revise the euro area macroeconomic forecasts in September, as recent data have shown some improvement. It is recalled that the ECB will meet on 9th September, but expectations are not a change in monetary policy, interest rates are expected to remain unchanged until 2024 and asset declines are far from the euro area horizon, as the ECB is considered one of the worst central banks.
– Written by Daniela Sabin Hathorn, market analyst
Follow Daniela on Twitter @HathornSabin