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Euro and the German IFO

Posted by Akhilesh Ganti on Mar 21, 2013 10:13:00 PM

Not only is the EUR/USD being weighed down by the uncertainty over Cyprus, but further evidence of the disparity in the performance between the EU and US economies is also pressuring the common currency. The preliminary March PMIs for the Eurozone confirmed this fact as both the German and French estimates released yesterday were below market expectations. What has to be more troubling for the Eurozone is the fact that the German figure was below the 50 (48.9) level indicating that their strongest economy might be entering into a contractionary phase. Given this, the German IFO, a highly respected leading indicator of economic health, slated for release later on today has taken on added significance. The market is expecting a robust reading of 107.8 and the risk is that anything less than this could put added pressure on the Euro. (click on chart to open in new tab)

{chart:Bloomberg}

GermanIFO march2013 preview

 

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