The IFO survey for November slipped to 97.8 from 98.7 expected and as result drove the euro below 1.1800 figure in early European trade. According to Gernot Nerb,  IFO's chief economist, "The indicator fell lightly in November, but we have to take into account that it made a huge leap in October. Despite the drop, the level is still the second highest in five years."  Mr. Nerb stressed that this month was more of "normalization" process for the survey. Although the number was relatively robust it did point to nagging concerns amongst European businessmen  regarding the depressive potential of a full 50 basis point rate hike by the ECB as well as possibly lingering effects on sentiment of the riots in France earlier in the month.  

The currency market for the most part shook off the news and the pair quickly stabilized around the 1.1800 level. The euro is presently boosted by expectations that ECB will raise rates at the December 1st meeting of the Central Bank's policy committee. Some players have even speculated that the hike may be as much as 50 basis points rather than the general expected  25bp rise.  We are highly doubtful that the ECB would be so bold, especially in light of today's German CPI data which registered far more muted results than market projections.  With most German states recording year or year CPI increases barely higher than the ECB target of 2%, a full 50 basis point hike at the December meeting would surely be overkill. In general the market appears to have found equilibrium at these levels and given the holiday thinned trading will likely consolidate further as traders look to next week's calendar chuck full of economic releases to  establish new themes.

Boris Schlossberg is a Senior Currency Strategist at FXCM.