Eurozone Retail Sales Disappoint to Test Market Optimism

It is a busy day ahead for the EUR/USD. Early in the European session, the German economy was in the spotlight, with factory orders for December in focus ahead of Eurozone retail sales figures. Partially reversing a 4.4% decline from November, orders increased by 3.2% versus a forecasted 2.0%.

Construction PMI numbers for Italy, Germany, France, and the Eurozone also showed improving trends. In January, the IHS S&P Global Construction PMI for the Eurozone increased from 42.6 to 46.1. All three member states registered less marked contractions in January.

The Sentix Investor Confidence Index also signaled improving market conditions in a busy morning session. The Index increased from -17.5 to -8.0 versus a forecasted -12.8. However, retail sales figures for the Eurozone drew more interest this morning. In December, retail sales fell by 2.7% versus a forecasted 2.5% slide, which increased by 1.2% in November.

According to Eurostat,

  • Food, drink, & tobacco sales slid by 2.9%, with non-food product sales declining by 2.6%.
  • Automotive fuel sales increased by 2.3%.
  • The Netherlands (-6.3%), Germany (-5.3%), and Luxembourg (-3.8%) recorded the largest monthly declines in retail trade volume.
  • Slovakia (+2.3%) and Austria (+1.6%) recorded the largest increases.
  • Year-over-year, the volume of retail trade declined by 2.8%.
  • The volume of retail trade fell by 6.9% for food, drink, & tobacco and by 0.6% for non-food products while rising by 6.0% for automotive fuels.

While the numbers were disappointing, they were unlikely to deter the ECB from pushing ahead with its near-term policy goals. Ahead of today’s retail sales figures, the EUR/USD rose $1.07991 before falling to a low of $1.07690.

However, in response to the retail sales figures, the EUR/USD fell to a session low of $1.07632 before steadying. At the time of writing, the EUR was down 0.24% to $1.07677.

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