German IFO business climate points to deceleration

The IFO business climate indicators fell below expectation lining up with other forward-looking indicators for the German economy.
The IFO index was rebased as more service sector companies were added to the survey.

Mario Blascak, PhD Independent Analyst

The business climate is cooling in Germany as fear of US-led trade wars escalating and the strength of Euro are both weighing on the export-oriented German economy. The headline IFO business climate indicators deteriorated to 102.1 in April, down from 103.3 reading in March and came out below market expectations. Highly respected German IFO business climate indicators lined up with the forerunner like ZEW index of investors confidence and the purchasing managers´ index published earlier in April.

The headline IFO business climate index was rebased and recalibrated in April after the IFO research Institute changed series from the base year of 2000 to the base year of 2005 as of May 2011 and then changed series to include services as of April 2018. The survey now includes 9,000 monthly survey responses from firms in manufacturing, service sector, trade and
construction.

Both sub-indices of headline IFO business climate indicator decelerated above expectations in April with expectation falling to 98..7 in April from 101.0 in March while current economic situation sub-index fell to 105.7 in April, down from 110.6 in March.

Sentiment in the Eurozone on a free fall

Within the sectoral structure of the IFO business climate indicator, the manufacturing deteriorated for the third consecutive month on deteriorating business expectations that dropped to their lowest since August 2016.

In the newly included service sector, the business climate index dropped markedly due to far less optimistic business expectation while assessments of the current business situation were also poorer than last month.

The business climate index also fell in wholesale and retail trade with the downturn in both current business situation and the short-term business outlook.

In construction, the business climate index hit a new record high as builders were positive about their expectations and their assessments of the current business situation remained almost unchanged.

German economic cycle clock

Author

Mario Blascak, PhD

Independent Analyst

Dr. Mário Blaščák worked in professional finance and banking for 15 years before moving to journalism. While working for Austrian and German banks, he specialized in covering markets and macroeconomics.

GBP/USD drops below 1.3550 on geopolitical tensions, hawkish Fed bets

GBP/USD trades with mild losses below 1.3550 in the second half of the day on Tuesday. The US Dollar recovers some ground amid ongoing Middle East tensions and hawkish expectations around the Fed's interest rate outlook, weighing on the pair ahead of US data releases.

EUR/USD stays below 1.1600 ahead of US data

EUR/USD struggles to capitalize on the overnight bounce and trades below 1.1600 on Tuesday. The data from the Eurozone showed that the annual HICP inflation rose to 3.3% in August from 2.9% in July, matching the market expectation, while the core HICP inflation edged lower to 2.4% from 2.5% in this period. In the second half of the day, JOLTS Job Openings and ISM Manufacturing PMI data will be featured in the US economic calendar.

Gold extends reversal below $4,400 on hawkish Fed repricing

XAU/USD extends its reversal below $4,400, posting a nearly 7% decline from last week's highs. Precious metals struggle this week as markets reprice a Fed rate hike in September.

Ripple, Cardano, and Dogecoin show weakness – Crucial EMAs in focus

Ripple, Cardano, and Dogecoin remain weak after double-digit losses last week, testing their crucial Exponential Moving Averages for immediate support. The technical outlook warns of further weakness in the prices of XRP, ADA, and DOGE as bullish momentum eases.

US JOLTS Job Openings set to show a steady labor market

The US Bureau of Labor Statistics has a busy week, releasing relevant employment data. It will start on Tuesday with the publication of the July Job Openings and Labor Turnover Survey (JOLTS) at 14:00 GMT. The JOLTS report is expected to show job openings stood at 7.3 million in July.

Diesel’s record $100 warning: The oil shock hiding in plain sight

The Oil market may look calmer than it did a few months ago, but diesel is sending a very different message. The US diesel crack spread, the premium of ultra-low sulphur diesel futures over WTI, recently surged above $100 per barrel for the first time, reaching an intraday record of just over $102.00.