IFO Beats But Provides Little Lift

Last updated 11/24/2009 4:27 AM ET (GMT -5) 3 Comments

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Boris Schlossberg

Director of Currency Research, GFT

IFO survey of business sentiment printed better than expected for the first time in three months lifting the EUR/USD off the session lows in morning European trade. The IFO rose to 93.9 versus 92.6 forecast – a full two point gain from the month prior. The current assessment index also rose to 89.1 from 88.0 projected.

The upside result in IFO was impressive but not surprising given yesterday’s better than forecast PMI readings which continue to indicate that EZ manufacturing and service sectors are recovering at a slow but steady pace despite challenging exchange rate conditions.

The positive IFO news was somewhat offset by an announcement from GM just prior to the release that it plans to cut 9,000 jobs at its Opel subsidiary. Employment stabilization continues to be the key to further EZ growth in 2010. The region has been able to avoid the draconian job cuts seen in the US, by utilizing a variety of job-mitigation and fiscal stimulus schemes, but analysts worry that any slowdown in demand in H1 of 2010 will precipitate another round of layoffs which would snuff out the nascent recovery.

The EUR/USD rebounded off the 1.4900 level in the aftermath of the report trading back to 1.4940 as some of the risk aversion flows from Asia subsided. However, the pair is likely to remain within the 1.4900-1.4950 range until North America comes on line and focus shifts to the first revision of US GDP numbers which could determine if risk appetite will continue as the day progresses.

Comments (3)

hsbc

November 24, 2009 at 04:51 AM ET

street talk on west lb

hsbc

November 24, 2009 at 04:51 AM ET

street talk on west lb

bschlossberg

November 24, 2009 at 05:00 AM ET

What does that mean?

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About The Author

Boris Schlossberg began his Wall Street trading career more than 20 years ago at Drexel Burhnam Lambert. There, he traded nearly every type of financial product on the market in the U.S., from equities and options to stock index futures and foreign exchange. His innate ability to analyze market information and use it to trade has helped him become an industry-recognized, “go to” trading professional.

These days, whenever the markets move, many organizations turn to Schlossberg for his take on the situation. He is a weekly contributor to CNBC's Squawk Box and a regular commentator for Bloomberg radio and television. His daily currency research is widely quoted by Reuters, Dow Jones and Agence France Presse newswires and appears in numerous newspapers worldwide. Schlossberg has written for publications like SFO magazine, Active Trader and Technical Analysis of Stocks and Commodities. He is also the author of Technical Analysis of the Currency Market and the co-author of Millionaire Traders: How Everyday People Are Beating Wall Street at Its Own Game with Kathy Lien. He joined GFT in 2008.