Ifo, a widely watched business climate index, said Tuesday that its index for Germany rose to 106.8 in June from an upwardly revised 105.7 in May, beating expectations.

Economists polled by the AFX financial news wire had forecast the index to dip to 105.2.
The business assessment index, which measures current conditions, climbed to 109.4 from 107.3 in May. Economists were looking for a June reading of 107.5.

The business expectations rose to 104.2 in June from 104.0 in the previous month, coming in above the 104.0 consensus forecast.

“The economic recovery continues to be robust,” said Ifo executive board member Gebhard Flaig.

“The decline of the business expectations did not continue; this time slightly more firms expect further improvement over the next six months,” he said.

SOURCE: AFP

Today’s activity appeared to be driven more by positioning rather than by orders with the dollar giving up some of yesterday’s gains. US Treasury Secretary John Snow’s comments that the US government remains ‘extremely dissatisfied’ at China’s slow pace of currency reform didn’t help the USD either. And the US Data that come out today so far seemed to have remained pretty low-key with a minor blow in weekly jobless claims numbers unexpectedly rising to 367k versus expectation of 319k. Federal Reserve chief Bernanke said that he expects an “orderly, moderate” decline in housing activity without mentioning inflation. The housing market has been a top economic performer in the past years which created a rapid appreciation in house prices empowered consumer spending and helped the economy move solidly ahead, but this might be about to change as well.

The GBP, meanwhile, also got a boost after key retail sales numbers showed that consumer spending in the country picked up in April — a factor which will advance expectations of a Bank of England rate hike before year end. Although the monthly gain was in line with expectations, the annual increase has above the forecasts of a 2.7 pct increase.

COMMENTARY
Overall after a short period of corrections and range trading, I think that the USD should resume its bearish trend in the coming weeks. What do you guys think? Do you think we have reached the bottom yet and will see the USD strengthen or is there still more downside to come?