Currency Analyst since 2010

EUR: German companies seem optimistic

German companies are more bullish on the euro’s prospects over the next 3 months than at any time since February. According to the survey conducted by Commerzbank, 26% of German companies expect EUR to advance against USD, while only 18% are forecasting a decline. In March there were more bears than bulls.

It seems that Germans started believing in the ability of the ECB’s to spur the economy. This month’s rate reduction by the central bank to a record 0.5% may already be paying dividends in Germany, where Chancellor Angela Merkel faces federal elections in 4 months (Sept. 22). German Ifo business climate climbed to 105.7 in May in its first gain since Feb. The nation’s economy added 0.1% in Q1 after 0.7% contraction in the previous period. The Bundesbank said in its monthly report released on May 21 that “economic activity is expected to improve markedly in the second quarter of 2013.”

In the longer term, however, German companies remain relatively pessimistic on EUR: 42% of respondents expect the single currency to weaken against the dollar over the next year, compared with 47% last month.

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