German IFO, Euro Zone PMI - Economic Data Preview

Germany’s [B]IFO Survey[/B] of business sentiment is expected to rise for the seventh consecutive month in July, pointing to continued improvement in firms’ 6-month economic outlook. Still, the reading is expected at 90.1, a print below the 100 “boom-bust” threshold, suggesting conditions are still deteriorating but at a slower pace. The Euro Zone [B]Purchasing Manager Index[/B] is set follow a similar a similar trajectory, printing at 43.5 in July to show that the manufacturing sector shrank for the 14th consecutive month, albeit at the slowest rate since the metric hit a record low in February. Some recovery is to be expected as an array of fiscal packages from governments across the currency bloc filter into the broad economy, but the big question in the Euro area as well as most anywhere at this stage is whether growth is sustainable after stimulus cash dries up. As it stands, the latest economic forecast from the International Monetary Fund (IMF) reveals that the Euro Zone will stand apart from other industrialized economies in seeing economic growth continue to contract in 2010, pointing to a comparatively slower return to higher interest rates that will keep the Euro on the defensive against most major currencies.