Germany received some good news today with the release of a better than expected German Ifo survey and a strong GDP reading. The positive data comes on the heels of a tough 24 hours for both the EUR and risky assets.
According to Destatis , the German economy grew by 0.5% in Q3 and GDP rose by 2.6% y/y. Both metrics were in-line with consensus forecasts. The other positive on the day was the strong Ifo business climate survey, rising to 106.6 from 106.4. The EUR/USD rose as high as 1.3410 before falling back to 1.3370 as investors wait for comments from today's meeting between Merkel, Sarkozy, and Monti .
The data caps a poor 24 hours for the EUR and risky assets in general. Yesterday's release of European PMIs along with awful industrial new orders numbers hint at a euro zone economy that is sliding towards a recession. A potential restructuring of the Dexia bailout threatens to weigh on the France's credit rating. Yesterday's failed bund auction also highlights the arrival of the European debt crisis to the core European nations. Investors are looking for a political solution from the European elite but this solution may be further down the road.
The movement of the EUR/CHF back below the 1.23 level highlights the amount of stress in the markets. A move back towards 1.20 could bring additional jawboning from the SNB which may support the pair. For the EUR/USD yesterday's low of 1.3320 has so far held this morning with resistance located at the base of the consolidation pattern from the November 17th low at 1.3430.
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