The German Ifo (Information and Forschung) Business Climate report was published earlier this morning, surprising many investors with a modest uptick beyond expectations. Most analysts, myself included, had expected the report to show a stronger downtick than even the forecast 113.6. The actual reading of 114.5 in fact beat last month’s reading of 114.2!
Explaining such random optimism is difficult from the short-term view this blog tends to take. Given the large sample size of 7,000 survey respondents, the Ifo report could have caught some of the optimism from earlier in the month and only recently hit the snag of the Greece bailout concern. It could also be that recent reports on confidence are expected to rise following the impending dismal second quarter. Either way, the report has helped many investors turn to higher yielding currencies and the EUR seems to be on the rise as a result.
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