German IFO index likely to maintain its upward trend

The German IFO business climate index is expected to increase to 109.0 in May from 108.6 in April, which was a 10-month high. The index has been on a clear upward trend since it reached a trough in October 2014. 

Lower oil prices and European Central Bank easing policies which led to a depreciation of the euro and lower borrowing rates are helping German businesses. That said, the 35% rise in oil prices since the January trough may have dented optimism somewhat. 

The current assessment of manufacturers, construction and wholesalers improved in April, while that of retailers deteriorated. 

"We expect Germany's positive momentum to continue in the near term, unless geopolitical events raise uncertainty or the situation in Greece takes an unexpected turn and causes contagion", said Standard Chartered in a report on Thursday.