German Ifo business climate index rises surprisingly to new high in October

The German Ifo Business Climate surprisingly rose in October to a new all-time high. The German economy is expected to see strong and broad-based growth ahead. Following a minor drop in September the Ifo index rose to 116.7 in October, driven by expectations and the assessment of the current situation. The sentiment has risen in all sectors from already high levels.

The Ifo index implies that the real year-on-year economic growth rates close to 4 percent. The current growth rate of around 2 percent is higher than potential growth, noted Nordea Bank in a research report. Monetary policy is expected to further underpin demand.

On the fiscal policy side, the new coalition might ease the reigns slightly. According to the Nordea Bank, overheating is expected to become an issue in 2018 as bottlenecks on the labor market would become acute.

“The main risk to our growth forecast of 1.8 percent next year is on the upside”, added Nordea Bank.

At 13:00 GMT the FxWirePro's Hourly Strength Index of Euro was neutral at 30.36, while the FxWirePro's Hourly Strength Index of US Dollar was bullish at 86.7087. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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