FXStreet Expert Contributor
FXStreet
Each month in Munich, the IFO Institute for Economic Research releases the IFO business climate survey. This is one of the most important economic figures for many Forex traders. The IFO Report is a figure that measures the results of 7,000 questionnaires completed by major German companies. The report measures the sentiment of the current and near future business climates. German companies have three options for responses when filling out the current business climate section of this survey; Good, Satisfactory, and Poor. For the near term climate questionnaire the firms have the following three options; Most Favorable, Unchanged, and More Unfavorable.
Basic Categories of the IFO Report:
Manufacturing
Construction
Whole sale
Retail sale
Understanding the Statistic:
The baseline of the IFO report is 100 points, and each month the number can fluctuate by 100 points above or below this baseline figure.
- An IFO report reading of 100 shows that the business climate has remained neutral.
- An IFO report reading above 100 means that the business climate has become healthier. The higher the number, the healthier the business climate.
- A strong economy might lead to inflationary pressure, which will in turn cause the ECB to tighten the interest rate. In this scenario, a tighter interest rate will lead to an appreciation of the Euro.
- An IFO report reading that falls below 100 signifies an unfavorable business climate which could lead to an economic slowdown or recession. To keep away from a recession, the ECB may decide to cut interest rates, which will in turn lead to a depreciating Euro.
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Editors’ Picks
EUR/USD climbs to two-week highs beyond 1.1900
EUR/USD is keeping its foot on the gas at the start of the week, reclaiming the 1.1900 barrier and above on Monday. The US Dollar remains on the back foot, with traders reluctant to step in ahead of Wednesday’s key January jobs report, allowing the pair to extend its upward grind for now.
GBP/USD hits three-day peaks, targets 1.3700
GBP/USD is clocking decent gains at the start of the week, advancing to three-day highs near 1.3670 and building on Friday’s solid performance. The better tone in the British Pound comes on the back of the intense sekk-off in the Greenback and despite re-emerging signs of a fresh government crisis in the UK.
USD/JPY recedes to multi-day lows near 155.50
USD/JPY is pulling back sharply at the start of the week, slipping back toward the 155.50 area as speculation mounts that authorities could step in to rein in further Yen weakness. That narrative gained traction after PM S. Takaichi secured a landslide victory in Sunday’s election, stoking expectations of a tougher line in defence of the domestic currency.
Editors’ Picks
EUR/USD climbs to two-week highs beyond 1.1900
EUR/USD is keeping its foot on the gas at the start of the week, reclaiming the 1.1900 barrier and above on Monday. The US Dollar remains on the back foot, with traders reluctant to step in ahead of Wednesday’s key January jobs report, allowing the pair to extend its upward grind for now.
USD/JPY recedes to multi-day lows near 155.50
USD/JPY is pulling back sharply at the start of the week, slipping back toward the 155.50 area as speculation mounts that authorities could step in to rein in further Yen weakness. That narrative gained traction after PM S. Takaichi secured a landslide victory in Sunday’s election, stoking expectations of a tougher line in defence of the domestic currency.
Gold treads water around $5,000
Gold is trading in an inconclusive fashion around the key $5,000 mark on Monday week. Support is coming from fresh signs of further buying from the PBoC, while expectations that the Fed could turn more dovish, alongside concerns over its independence, keep the demand for the precious metal running.
Crypto Today: Bitcoin steadies around $70,000, Ethereum and XRP remain under pressure
Bitcoin hovers around $70,000, up near 15% from last week's low of $60,000 despite low retail demand. Ethereum delicately holds $2,000 support as weak technicals weigh amid declining futures Open Interest. XRP seeks support above $1.40 after facing rejection at $1.54 during the previous week's sharp rebound.
Japanese PM Takaichi nabs unprecedented victory – US data eyed this week
I do not think I would be exaggerating to say that Japanese Prime Minister Sanae Takaichi’s snap general election gamble paid off over the weekend – and then some. This secured the Liberal Democratic Party (LDP) an unprecedented mandate just three months into her tenure.
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