Bob Mason
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It was a relatively busy morning on the European economic calendar. Economic data from Germany and the Eurozone and the ECB’s monthly Economic Bulletin were in focus.

German Stats Disappoint While Eurozone Numbers Shine

Following some woeful retail sales figures from Germany in the week, construction PMI numbers also disappointed.

In January, the IHS Markit Construction PMI fell from 47.1 to 46.6.

While stats from Germany continued to disappoint, retail sales figures for the Eurozone were upbeat. This was in spite of a 9.6% slump in German retail sales back in December.

For the Euro bloc, retail sales rose by 2.0% in December, coming in ahead of a forecasted 1.6% increase. In November, retail sales had fallen by 5.7%.

According to Eurostat,

  • Automotive fuel sales jumped by 5.1%, with food, drinks, & tobacco sales climbing by 1.9%.
  • Non-food product sales rose by 1.5%, supported by a 12.4% surge in prices for clothing & footwear.

By member state

  • France (+22.3%), Belgium (+15.9%), and Ireland (+11.4%) saw the largest increases in sales.
  • The Netherlands (-10.9%) and Germany (-9.6%) recorded the largest declines.

The ECB Economic Bulletin

While economic data was skewed to the positive for the EUR, the ECB’s Economic Bulletin delivered yet more warnings.

In the wake of the ECB monetary policy press conference, the Economic Bulletin warned that economic conditions could sour again in Q4.

Headline points from the Bulletin included:

  • Having increased by close to 14% in Q3, consumer spending weaned in Q4 as a result of containment measures.
  • Short-term labor market indicators have continued to improve, but are still signaling contractionary developments.
  • The 2nd wave of the pandemic points to downside risks to investment in Q1 2021.
  • Following a bounce in euro area trade in Q3, growth in trade has moderated.
  • Looking forward, the roll-out of vaccines allows for greater confidence in the resolution of the health crisis.

Market Impact

Once more the EUR was on the back foot, falling off early highs in response to the ECB Economic Bulletin. The EUR slid from pre-release $1.20 levels to a current day low $1.19831 before finding support.

At the time of writing, the EUR was down by 0.38% to $1.19896.

For the European equity markets, the bulletin also weighed on the majors, before finding support.

At the time of writing, the EuroStoxx600 was up by 0.06%, with the CAC40 and DAX30 rising by 0.23% and by 0.26% respectively.

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