EZ Retail PMI (OCT) (9:00 GMT, 4:00 EST) EZ Retail Sales (MoM) (SEP) (10:00 GMT, 5:00 EST) <?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
Actual: 52.8 Actual: -0.6%
Expected: -- Expected: -0.4%
Previous: 52.4 Previous: 0.7%
How Did the Markets React?<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
This morning the European FX and equities markets made it very clear that they werent paying any heed to Euro-zone economic data, as traders were focused on everything from the mid-term elections in the <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />US to strong earnings in Europe. Fixed income markets had mixed reactions to Euro-zone data, but focused more on retail sales, which plunged 0.6% in the month of September, bringing the annual rate down to 1.4%. The contraction in sales was more than the expected slip of 0.4%, and was led by a decline in non-food products, such as clothing and footwear. Todays result highlighted the unwillingness to spend in the Euro-zone, despite a tight labor market and optimistic sentiment. However, retail spending data could see an improvement next month, as retail PMI showed a surge in annualized sales during October.
Bonds German 10-Year Bunds
FX EUR/USD
While price action in the EUR/USD pair was technically correct for both Euro-zone retail PMI and retail sales, the 10 point changes upon the releases were merely a blip on the charts as the central focus of today is on the greenback side. Today is just another example of political events trumping fundamentals, as mid-term elections are in process in the US, and major speculation is being played out as to whether the Democrats will take back Congress. Back in Europe, however, the brief gain in the euro at 9:00GMT followed stronger Euro-zone retail PMI, which showed that sales versus a year ago in October surged higher. Euro subsequently eased back at 10:00GMT as retail sales in the Euro-zone plunged 0.6% in the month of September, bringing the annual rate down to 1.4%. The contraction in sales was more than the expected slip of 0.4%, and highlighted the unwillingness to spend in the economy, despite a tight labor market and optimistic sentiment.
Equities Xetra DAX 100 Index
European equity markets hit fresh five-year highs today led by oil stocks, bank, and gains were in line with a strong showing in US markets, as traders there price in the possibility of Democrats winning the House, which would create a legislative gridlock situation. Historically, years in which the House and Senate are split between Republicans and Democrats are more profitable for the Dow. Back in Europe, the German Xetra 100 topped out at 6354.27 but subsequently eased back to 6,345.16, which was still 0.2% higher on the day. Financial stocks were lifted by solid results from Deutsche Postbank, Germanys biggest retail bank. The company said its third-quarter net profit rose 16.7 percent, as interest income climbed nearly 14 percent. Given the positive factors for shares in Germany, there is little indication that equity markets even noticed economic data out of the Euro-zone.
