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German Business Sentiment Stabilizes But Does Not Rebound

Last updated 3/25/2009 5:29 AM ET (GMT -5) 0 Comments - Add your comment

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Boris Schlossberg

Director of Currency Research, GFT

The IFO survey of business sentiment printed in line with consensus expectations coming in at 81.2 versus forecast of 82.2. The business expectations  component improved  marginally to 81.6 from  80.9 while the current assessment reading sunk lower to 82.7 from 84.3 the month prior but was nevertheless better than expectations of 82.5 print. 

Despite the small uptick in the gauges, the IFO remains mired at its lowest level since the early 1980’s and suggests that at best German business sentiment has simply stabilized but has yet to show any signs of improvement. The news is mildly surprising given the better readings from ZEW and Belgian Business Sentiment reading this month, but it does underscore the severity and intransigence of the global recession affecting the German economy.

Gernot Nerb the chief economist of the IFO institute noted that economic conditions in Germany may be approaching a turning point and certainly lack of further deterioration in the readings is a somewhat positive sign for euro bulls. After a knee jerk sell-off the EUR/USD climbed steadily higher  in the post news reaction targeting the 1.3500 handle. The pair has corrected much of the overbought condition  in the past few days maintains its uptrend for the time being as the focus of the currency market remains on US fiscal and monetary initiatives.

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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.