German IFO Business climate beat with 108.2 points and also expectations were better than predicted with 103.8 instead of 102.4, even better than the previous month that saw 103.3. There was one disappointment from the Current Assessment component: it dropped from 114 to 112.6, worse than 113.3 predicted.
EUR/USD made a small move to the upside but it didn’t go too far. After the initial rise, we are seeing the pair slide back down.
Germany’s No. 1 Think Tank was expected to report a slide in the business climate from 108.5 in September to 107.8 now in October.
EUR/USD traded around 1.1040 before the publication, recovering from the lows.
The other think tank, ZEW, already reported a big fall in confidence, VW related. The crisis in Volkswagen could have a ripple effect on the whole German economy due to the vast size of the company and the long supply chain.
The euro reached its current levels because of Draghi’s words: the president of the ECB used all his verbal skills to hint about imminent action in December, and that sent EUR/USD over 300 pips lower.
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