Germany, Europe's Growth Engine, Loses Steam

Germany's Ifo Business Climate Index fell sharply in February to 105.7, missing estimates of 106.8. The decline marks a third straight month of falling sentiment with a manufacturing slowdown pointing to a weaker pace of growth in Germany. This gap down was its largest since December 2012, when it fell from 102.3 to 98.8. Ahead of the Ifo data, Germany's GDP for the fourth quarter showed the economy expanding at a pace of 0.3%, unchanged from the previous month. On a yearly basis, GDP expanded at a pace of 2.1%, unchanged monthly but above the 1.60% read last year. Earlier on Monday, flash manufacturing PMI figures from Germany printed at a 15-month low, further evidence of stagnation as Europe’s largest economy suffers from the slowdown from China. The Euro continued to decline yesterday and fell to session lows of 1.099 before pulling back higher by end the day.

The Swedish Riksbank's monetary policy meeting minutes from February 11th are due today during the European trading session. The Swedish Riksbank had cut interest rates further by 15 basis points, bringing the central bank's interest rates from -0.35% to -0.50%. The rate cut came as a surprise due to Sweden's fairly resilient economy. The bank said that it was forced to act due to weaker confidence in reaching the 2% inflation target, and noted that it could further expand its policy tools in order to safeguard the metric if necessary. Following the release, the Swedish Krona fell over 1.6% against the Euro. The meeting minutes due today will shed light on the future course of action from the Swedish Central Bank. EURSEK has retreated the past 5 days after topping out near 9.520, closing lower yesterday at 9.347.