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 stays weak near 1.1850 after dismal German ZEW data
EUR/USD remains in the red near 1.1850 in the European session on Tuesday. A broad US Dollar bullish consolidation combined with a softer risk tone keep the pair undermined alongside downbeat German ZEW sentiment readings for February.
GBP/USD holds losees near 1.3600 after weak UK jobs report
GBP/USD is holding moderate losses near the 1.3600 level in Tuesday's European trading. The United Kingdom employment data suggested worsening labor market conditions, bolstering bets for a BoE interest rate cut next month. This narrative keeps the Pound Sterling under bearish pressure.
USD/JPY slides further below 153.00; eyes 200-day EMA amid a firmer JPY
The USD/JPY pair meets with a fresh supply on Tuesday and slides further below the 153.00 mark heading into the European session, reversing a major part of the previous day's positive move. Spot prices, however, manage to hold above the 200-day Exponential Moving Average support, around the 152.50 region, preserving a tentative bullish bias despite a shallow cushion.
Editors’ Picks
EUR/USD stays weak near 1.1850 after dismal German ZEW data
EUR/USD remains in the red near 1.1850 in the European session on Tuesday. A broad US Dollar bullish consolidation combined with a softer risk tone keep the pair undermined alongside downbeat German ZEW sentiment readings for February.
GBP/USD holds losees near 1.3600 after weak UK jobs report
GBP/USD is holding moderate losses near the 1.3600 level in Tuesday's European trading. The United Kingdom employment data suggested worsening labor market conditions, bolstering bets for a BoE interest rate cut next month. This narrative keeps the Pound Sterling under bearish pressure.
Gold pares intraday losses; keeps the red above $4,900 amid receding safe-haven demand
Gold (XAU/USD) attracts some follow-through selling for the second straight day and dives to over a one-week low, around the $4,858 area, heading into the European session on Tuesday.
Canada CPI expected to show sticky inflation in January, still above BoC’s target
Economists see the headline CPI rising by 2.4% in a year to January, still above the BoC’s target and matching December’s increase. On a monthly basis, prices are expected to rise by 0.1%.
The week ahead: Key inflation readings and why the AI trade could be overdone
It is likely to be a quiet start to the week, with US markets closed on Monday for Presidents Day. European markets are higher across the board and gold is clinging to the $5,000 level after the tamer than expected CPI report in the US reduced haven flows to precious metals.
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