Euro Breaks 1.4600 After German IFO Disappointment

Euro Breaks 1.4600 After German IFO Disappointment, Will U.S. Data Keep Dollar Rally Going? . The Euro broke below 1.4600 after the German IFO Survey fell to a three year low. German business confidence fell to 94.8 from 97.5 in July and far below the expected 97.2. The EURUSD was already trading heavy have fallen over 100 points in Asian trading ahead of the German GDP report which showed the country’s economy contracted 0.5% in the second quarter. The outlook for Europe’s largest economy is now expected to continue to decline in 3Q, which was evident by the fall in the expectations component of the IFO indicator to 87.0 from 90.0, which was the lowest since February, 1993. Additionally, consumer confidence in the country fell to 1.5, the lowest in five years, declining the prospects of domestic growth. The German economy shrinking for the first time in four years may be a clear sign for the ECB, that a more accommodative monetary policy is needed to prevent the region from falling into a recession. German efficiency and emerging market demand helped it withstand the head winds from the U.S. longer than expected, but the subprime crisis’s impact on global growth has finally taken its toll. The central bank’s decision to raise credit costs in July has only accelerated the decline and may have brought the region to the brink of a recession, as German growth has masked weakness in other European leaders like Spain and Italy.