European Session: Euro Weakens Despite Strong German Ifo Survey Results

Market Brief

The dollar strengthened across the majors with the largest gains posted against the sterling and the aussie. The EurUsd fell 15pips breaching 1.43 as a level of support, the UsdJpy is mostly unchanged at 94.17. Equity markets are trading lower in Europe, while futures point to a slightly lower open in the US. Commodities are mixed an interesting phenomenon in this asset class has been the inverse relationship between oil and gold, the price of WTI is slightly lower at $71bbl conversely gold is a bit higher at $948oz. Bond prices are mostly unchanged across the US Treasury curve, the 2, 10, and 30 yr rates are lower by 1bp respectively reflecting the lack of conviction in the market.

The economic fundamentals continue to fall into place for the Eurzone, but improving conditions are not being translating into the price of the Eur. August German Ifo surpassed expectations at 90.5 vs. estimates of 89.0, providing additional support for the broader recovery theme. Comments from lfo Economist Abberger cautioned optimistic investors regarding the pace of a recovery in Germany, managing expectations will be a key focus leaders on the political front among the G10. Traders long the Euro may not be prompted to exit just yet, but once volume returns a sharper direction in terms of price should arise along with momentum.

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