Financial markets always tend to closely monitor German’s economic data not only because the country is always acting as the locomotive of the European economy but also because the current political uncertainties currently occurring in Germany. Indeed, Merkel has been unable to build a coalition within the Bundestag and new elections may occur in January.
This morning has been released the IFO business climate data which provides details concerning indicator of economic development. The data is very strong despite markets expected a slight deceleration. The data is now standing at all-time high.
Other German data are improving. German GDP printed at 0.8% q/q for Q3. German will likely record its best economic year since 2011. We mentioned yesterday inflation in the US which is increasing. It is the same thing that is happening in Europe.
Now that markets’ expectations are way more significant concerning the Fed’s monetary policy and we believe that there are room for disappointment, we believe the Eurodollar should continue climbing higher.
By Yann Quelenn