The highly regarded German Ifo Business Climate dropped significantly to 106.9, 3 points lower than last month, reversing all the gradual gains seen previously. Expectations were for a marginal slide of 0.3 points.
EUR/USD reacts by dropping below another support line.
Euro/dollar is now dipping below support at 1.2520. This isn’t a strong support line, but still another leg down for the battered common currency. Update: the pair managed to creep above this line after the initial fall.
Also the other figures released by IFO disappointed: the Current Assessment dropped from 117.5 to 113.3 points (no change expected). The IFO Expectations dropped from 102.7 to 100.9. A smaller slide to 102 was predicted.
IFO is Germany’s No. 1 Think Tank, yet it publishes its data after the ZEW institute, which also showed a disappointing drop in the economic sentiment.
Earlier, German manufacturing PMI badly disappointed by falling to 45 points. It followed a deeper fall in French manufacturing PMI. EUR/USD reacted by testing new 22 month lows and fell to 1.2535 – not too far from lows seen yesterday.
The purchasing managers’ indices for the whole euro-area fell short of expectations as well, but this wasn’t a big surprise after French and German figures fell short: manufacturing dropped from 45.9 to 45 (46.1 was expected). Services slid from 46.9 to 46.5, while no change was predicted. Germany sets the tone in the PMIs.
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