Euro Weighs Slightly on Optimism in Germany

Germany’s stellar economic year isn’t enough to prevent companies and investors from getting a touch of the nerves.The closely watched Ifo index of business confidence eased back from a record high in August — a slight drop but one that follows a separate survey showing a third monthly slide in investor confidence in the nation. The wavering in sentiment comes even as economic data shows the country on track for its strongest growth since 2011, and can be pinned largely on one development: the appreciation of the euro.

“Most companies do not change prices immediately in their foreign markets when the exchange rate changes — that means their margins will be smaller and I’m sure the export industry is concerned about that,” Clemens Fuest, president of the Munich-based Ifo Institute, said in a Bloomberg Radio interview. “If the euro rises above something like $1.20, I think companies will be concerned about it. But it’s just one factor.”

Source: Euro Strength Takes the Shine Off Germany’s Bumper Economic Year – Bloomberg

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Craig Erlam

Craig Erlam

Senior Currency Analyst at OANDA
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the Wall Street Journal and The Telegraph, and he also appears regularly as a guest commentator on networks including Sky News, Bloomberg, CNBC and BBC. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.