Retail spending in Germany is expected to increase 0.2% in March as falling price pressures continues to drive up consumer spending power however, private-sector consumption may unexpectedly fall for the third consecutive month as households face a weakening labor market paired with tightening credit conditions.
Trading the News: German Retail Sales
What’s Expected
Time of release: 05/04/2009 06:00 GMT, 02:00 EST
Primary Pair Impact : EURUSD
Expected: 0.2%
Previous: -0.2%
Impact the German Retail Sales has had on EURUSD over the last 2 months
February 2009 German Retail Sales
| Household spending in Germany unexpectedly fell for the second consecutive month in February, and growth prospects are likely to deteriorate further this year as the Europe’s largest economy faces its worst recession in over half a century. Retail sales slipped 0.2% during the month, following the 0.9% from January, and the breakdown of the report showed that spending on food and tobacco slipped another 0.5%, while demands for information technology plunged 2.5% from the previous month. The data reinforces a weakening outlook for the region as private-sector consumption continues to falter, and conditions are likely to get worse as households face a weakening labor market paired with tightening credit conditions. Meanwhile, after lowering the overnight lending rate by 25bp to 1.00% in March, the ECB is expected to ease policy further this week as the growth prospects continue to deteriorate. | |
January 2009 German Retail Sales
| German retail sales fell 0.6% in January amid projections for a 0.2% rise from the previous month, and the outlook for Europe’s largest economy remains bleak as the region is expected to face its worst economic downturn since World War II. A deeper look at the report showed that the annual rate of consumption fell 1.3% from the previous year, while demands for clothing and shoes slipped 1.5%, and households may continue to cut back on spending as they face fading demands for employment paired with tightening credit conditions. As a result, the European Central Bank is likely to take further steps to shore up the economy, and is anticipated to lower the benchmark interest rate by another 50bp to a record low later today as the outlook for growth and inflation falter. Nevertheless, as the downturn in the global economy intensifies, fears of a deepening recession could lead the ECB to adopt unconventional measures to soften the landing of the economy as trade conditions falter. | |
What To Look For Before The Release
Traders with access to market depth information via the FXCM Active Trader Platform may use it to gauge the potency of the economic data release as well as to shed some light on the market’s directional bias. Increasing volume ahead of the announcement will telegraph likely follow-through behind whatever move is to materialize, while an imbalance in available liquidity on the Bid versus the Offer side of the market will tell us the direction major institutions are likely favoring ahead of the announcement:
| Bullish Scenario:
If we see substantially deeper available liquidity on the Bid side of the market, this tells us that major price providers in the market are looking to buy the Euro against the US Dollar. Considering that close to 60% of all FX market volume is cleared through just six top banks, we see it prudent to be on the same side of the trade as major institutions and will favor a bullish bias on EURUSD ahead of the data release. | Bearish Scenario: |
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