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 Germanys 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, Italys 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.