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German Business Sentiment Improves to Deliver EUR Support

Bob Mason
·2 minuto per la lettura

It was a quiet Eurozone economic calendar, with stats limited to German ifo Business Climate Index numbers for May.

Ahead of the stats, a pickup in market risk appetite delivered support for the EUR. News of US President Joe Biden saying that China tariffs are under review, Shanghai lockdown measures easing, and reaction to hawkish ECB President Lagarde chatter delivered support for the EUR and riskier assets.

German Business Sentiment Improves in May

The ifo Business Climate Index increased from 91.9 to 93.0, beating a forecasted decline to 91.4.

According to the May report,

Manufacturing:

  • The index jumped, supported by a better assessment of the current situation and a pickup in business expectations.

  • Firms remained uncertain about the coming months, however, driven by a significant slowdown in demand and incoming orders.

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Services:

  • Service providers were more satisfied with their current business, improving at the most marked rate since June 2021.

  • Expectations became pessimistic, with transport and logistics companies having material concerns.

Trade:

  • The index for trade increased for the first time in three months, supported by an improvement in the assessment of the current situation.

  • While expectations improved, sentiment towards the months ahead remained pessimistic.

At the country level, the situation index climbed from 97.3 to 99.5, with the expectations index up from 86.8 to 86.9. Economists forecast the situation index to fall to 95.8 and the expectations index to decline to 83.5.

Market Impact

Ahead of today’s numbers, the EUR fell to a pre-stat and a current-day low of $1.05566.

In response to today’s stats, the EUR rose to a post-stat and a current-day high of $1.06736.

At the time of writing, the EUR was up by 1.06% to $1.06724, with the DAX up 0.53%. The CAC40 gave up early gains, however, to sit with a modest 0.13% loss.

Next Up

There are no stats due out later in the day to provide the EUR and the European majors with direction.

This article was originally posted on FX Empire

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