The euro moved higher against the US dollar earlier Friday, following an unexpected rise in German business sentiment. The German Ifo business climate index hit a fresh all-time in November, despite the ongoing political uncertainty.
By 1135 BST, the euro was trading at $1.18592. While that was a little lower than the $1.18692 it achieved in the wake of the data release, its still well above the market open and around one cent higher than where it began the week.
The monthly German Ifo index measures business sentiment of German firms, across the industrial and trade sectors. The November index was unexpectedly upbeat.
The headline Ifo climate index hit 117.5 in November, the highest level on record and up from October’s 116.8.
The index measuring business sentiment regarding the current situation, edged a little lower to 124.4 from 124.8 in October. Meanwhile, the expectations sub-index was higher, rising to 111.0 in November from 109.2 a month earlier.
“Sentiment among German businesses is very strong,” said Clemens Fuest, President of the Ifo Institute “This was due to far more optimistic business expectations.”
“The German economy is on track for a boom,” Fuest said, adding: “The latest figures indicate economic growth of 0.7% in the fourth quarter, pointing to growth of 2.3% for 2017 as a whole.”
German GDP grew 0.8% on the quarter in Q3, the fastest pace within the group of the world’s seven most developed countries.
German politics could still weigh
This latest survey shows no signs that business sentiment has been hampered by the current lack of political stability in Germany. However, there’s still a chance it could begin to hit their outlook, particularly if the disagreement between potential coalition partners isn’t resolved soon.
Talks collapsed Sunday and acting Chancellor Angela Merkel has stated she would prefer to return to the polls than form a minority government.