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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EUR/USD struggles for direction amid USD gains
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GBP/USD drops to daily lows near 1.3360
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Japanese Yen bulls have the upper hand as hawkish BoJ outlook offsets risk-on mood
The Japanese Yen remains on the back foot through the early European session on Friday, though it lacks bearish conviction amid hawkish Bank of Japan expectations. Traders have been pricing in the possibility that the BoJ will hike interest rates as early as next week.
Editors’ Picks
EUR/USD struggles for direction amid USD gains
EUR/USD is trimming part of its earlier gains, coming under some mild downside pressure near 1.1730 as the US Dollar edges higher. Markets are still digesting the Fed’s latest rate decision, while also looking ahead to more commentary from Fed officials in the sessions ahead.
GBP/USD drops to daily lows near 1.3360
Disappointing UK data weighed on the Sterling towards the end of the week, triggering a pullback in GBP/USD to fresh daily lows near 1.3360. Looking ahead, the next key event across the Channel is the BoE meeting on December 18.
Gold losses momentum, challenges $4,300
Gold now gives away some gains and disputes the key $4,300 zone per troy ounce following earlier multi-week highs. The move is being driven by expectations that the Fed will deliver further rate cuts next year, with the yellow metal climbing despite a firmer Greenback and rising US Treasury yields across the board.
Week ahead: US NFP and CPI, BoE, ECB and BoJ mark a busy week
After Fed decision, dollar traders lock gaze on NFP and CPI data. Will the BoE deliver a dovish interest rate cut? ECB expected to reiterate “good place” mantra. Will a BoJ rate hike help the yen recover some of its massive losses?
Big week ends with big doubts
The S&P 500 continued to push higher yesterday as the US 2-year yield wavered around the 3.50% mark following a Federal Reserve (Fed) rate cut earlier this week that was ultimately perceived as not that hawkish after all. The cut is especially boosting the non-tech pockets of the market.
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