German Business Survey Pushes Euro Up Against Dollar

The euro climbed against the dollar again on Wednesday as business confidence in Germany proved stable.

In early European trading the euro climbed to 1.2854 dollars in early European trading from 1.2826 dollars late on Tuesday in New York. Business confidence in Germany steadied at a high level in April, after topping a 15-year high the previous month, a new survey showed Wednesday, underlining the ongoing recovery of Europe's biggest economy.

Results better than expected

The widely watched business climate index, calculated each month by the Munich-based economic research institute Ifo, slipped only fractionally, to 105.6 points in May from a 15-year high of 105.9 points in April, Ifo said.

Analysts had been expecting a steeper decline. Consensus forecasts had penciled in a reading of 105.2 points this month.

"Overall, this is a very healthy survey, confirming Germany's recovery story," said Audrey Childe-Freeman, an economist for the Canadian Imperial Bank of Commerce in London.

Calyon economist Mitul Kotecha said the smaller than expected drop in the index "will help the euro to sustain its gains and will do little to dissuade many in the market who look for the ECB to hike by 50 basis points next month."

Most analysts believe the European Central Bank will lift eurozone interest rates to 2.75 percent on June 8, from the current 2.50 percent.

Commenting on the business-climate survey, Ifo board member Gebhard Flaig said: "The almost unchanged reading results from two divergent trends -- companies are more positive in their assessment of their current business situation. But they've become slightly more cautious with
regard to the outlook for the next six months."

For its monthly survey, Ifo polls around 7,000 companies about their assessment of current business and their expectations for the next six months.