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Forex News: A Record Drop in Retail Sales Bodes Poorly for German Growth

By Benjamin Spier
31 January 2013 07:40 GMT

THE TAKEAWAY: German retail sales saw the biggest decline in 19-months -> The worse sales bodes poorly for Q4 growth -> Euro decline is quickly erased

German retail sales saw the biggest decline in 19 moths in December, thereby raising doubts that the German economy will see a pickup in growth in the fourth quarter. Retail sales declined 1.7%, much lower than the expected 0.1% drop in sales and a reversal of November’s revised 0.6% rise in sales. Retail sales dropped 4.7% (real) from December 2011, according to the German Federal Statistical Office.

The annual drop in sales was partially affected by two less shopping days in December 2012 when compared to December 2011.

The German economy has been suffering from the effects of the Euro debt crisis. German growth slowed to 0.2% in the third quarter of 2012, and the sharp retail decline doesn’t add to signs of improved economic growth in the Euro-zone’s biggest economy. Improved German growth would be Euro positive.

The decline in Euro trading following the disappointing retail sales release was quickly erased, and EUR/USD is trading around 1.3550 at the time of this writing. The pair set a new 14-month high yesterday at 1.3587, and that level may continue to provide resistance. A broken resistance line at 1.3500 may now provide support.

EURUSD Daily: January 31, 2013

A_Record_Drop_in_Retail_Sales_Bodes_Poorly_for_German_Growth_body_eurusd_daily_chart.png, Forex News: A Record Drop in Retail Sales Bodes Poorly for German Growth

Chart created by Benjamin Spier using Marketscope 2.0

-- Written by Benjamin Spier, DailyFX Research. Feedback can be sent to bbspier@fxcm.com .

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31 January 2013 07:40 GMT