The euro pared earlier gains against the US dollar, following the release of weaker-than-projected business climate index for Germany.
EUR/USD fell from a session high, registered at 1.3518 at 7:56 GMT, to erase 0.2% today, reaching 1.3493. Support was expected at September 23rd low, 1.3478, while resistance was to be met at September 23rd high, 1.3544.
Earlier today the IFO institute reported that German business climate index, based on a survey of 7 000 executives, increased for the fifth consecutive month in September, reaching a reading of 107.7, after the index stood at 107.6 in August. Experts had anticipated that the index will advance to 108.0. Data implied that Euro zone’s largest economy was benefiting from unemployment rate near a 20-year low and the end of the longest recession on record. Despite the fact that business entities in Germany considered current business conditions less favorable, as the index showed, their expectations of the future economic development remained optimistic. The IFO index of current assessment climbed less than expected to reach 111.4 in September instead of 112.5, following the value of 112.0 in August. At the same time, the IFO index of expectations rose to its highest point since June 2011, as companies expected support by the export-oriented business. The corresponding index climbed to a reading of 104.2 in the month of September, exceeding preliminary estimates of a value of 104.0, after in August the index stood at 103.3. Daimler AG, the world’s third-largest manufacturer of luxury vehicles, said in September that it was having having trouble filling orders, as August sales at an all-time high put premium-car manufacturers on course for record full-year deliveries, according to Bloomberg. Porsche AG said that it will reach a target of selling more than 200 000 vehicles per year in 2015 or 2016, about three years earlier than initially projected.
Although German economy was signaling that economic growth was on course, Bundesbank said that the pace was uneven. The German central bank predicted that economy will expand 0.3% in 2013 and 1.5% in 2014. The European Central Bank, on the other hand, forecast the Euro zone economy will shrink 0.4% in 2013 and gain 1% during the next year. The common currency bloc’s Gross Domestic Product expanded 0.3% during the three months through June, following six quarters of contraction.
Meanwhile, the euro was gaining against the sterling, with EUR/GBP cross up by 0.31% to trade at 0.8438 at 9:40 GMT. In addition, EUR/JPY pair was steady, gaining 0.04% on a daily basis to trade at 133.46 at 9:43 GMT.
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