European Consumers Continue To Retrench

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EUR/USD –  Euro-zone retail sales were flat in December following a 0.5% decline the month prior. The lack of growth was a surprise following the strong consumption figures from Germany which saw a 0.8% rise. Economist were forecasting a 0.4% in the economic region, but declines in Portugal and Romania offset the gains from Europe’s  largest economy. Meanwhile, a separate report showed that the manufacturing and service sectors pace of expansion slowed in January. The PMI composite reading fell to 53.7 from 54.2, despite an upward revision from the initial reading for the month from 53.6. ECB member Axel Weber attributes January’s weakness to temporary factors and believe the economy is on a solid path. However, job growth is expected to be limited until 2011 which is why the central bank is expected to keep rates at their current low at tomorrow’s policy meeting.   To discuss this and other topics, please visit the EUR/USD Forum.