Brussels, 22/08/2001 (Agence Europe) - While most economists predicted that the morale of German business leaders would be seriously affected by the slowdown in the first economic results of the euro zone, it remains relatively high: the business climate barometer measured by the Ifo economic institute increased in July to 89.8 points, from 89.5 points in June. Observers expected a fall in the index to 88.6 points on average. This is the first rise recorded by Ifo since the month of January. This unexpected result has given a kick-start to the European single currency compared to the dollar: the euro is again above $0.92, its highest level for five months (13 March). By midday Wednesday, the European currency exchange rate was $0.9224. German business leaders are now more optimistic about the prospect of economic activity over coming months.
"All news seems good for the euro", said Audrey Childe-Freeman, economist at the Canadian Imperial Bank of Commerce. She added that the "market is becoming very selective in its reaction to the statistics and one can now see a radical change of feeling towards the dollar". According to Ms Childe-Freeman, the euro's come-back would be all the easier "if there is bad news from the United States and good from Europe". The day before, the decision expected from the US Federal Reserve (Fed) to lower credit costs by a further 25 base points, to 3.5%, weighed heavily on the dollar's exchange rate. "The dollar is still under pressure", admits David Mann, Standard Chartered economist, who explains that the market is now waiting for the meeting of the European Central Bank (ECB) on rates, scheduled for 30 August. Most analysts are, he says, tabling on a fall in the ECB key rate.