Euro sank due to negative statistics on retail sales in Germany


02 February 2021

Andrey Maslov, analyst, FINAM Group

On Tuesday, February 2, EUR / USD rallied 0.13% and is trading near 1.2075, while the DXY dollar index is down 0.15% at 90.890.

The American currency became the beneficiary of the Euro overnight sale after it became known that lockdowns in Europe led to a reduction in consumer spending. This allowed the American currency to strengthen against the euro by 0.5%, but at the moment we are seeing a certain correction. The euro fell overnight to its lowest value in the last two and a half weeks in response to disappointing data on retail sales in Germany (the indicator decreased by 9.6% (m / m) in December, compared with an increase of 1.1% (m / m)). m) a month earlier, which turned out to be significantly lower than the forecast values ​​of -2.6% (m / m)). Europe is still feeling the impact of the second wave of coronavirus, especially in small and medium-sized businesses and the consumer sector of the economy.

Global sentiment remains generally cautious, with investors still wary of last week’s market volatility, fueled by the retail hype in GameStop stock. Also, market participants expect a decision on a new stimulus package to combat the consequences of the coronavirus in the United States. Sentiment improved somewhat after a two-hour meeting on Monday between US President Joe Biden and a group of ten Republican senators to discuss a cut stimulus package. However, Biden said the group’s proposed $ 618 billion package was not enough to solve the problems, and insisted on keeping the $ 1.9 trillion package he proposed in January. Democrats also passed a resolution to pass a $ 1.9 trillion stimulus package on Monday, a move to bypass Republicans for a decision in Congress.

As for macroeconomic statistics, the final data on the index of business activity in the manufacturing sector from Markit for January became known in the eurozone yesterday. Thus, the indicator decreased by 0.4 percentage points to 54.8 points, which turned out to be slightly higher than the preliminary estimate of 54.7 points. A similar index was published for Germany: in January, the value of the indicator was 57.1 points (+0.1 pp to the preliminary estimate), which is 1.2 pp lower than the December value.

The unemployment rate in the eurozone remained unchanged and fully in line with analysts’ forecast, amounting to 8.3% in December 2020.

In the US, the final data for January was released yesterday on the manufacturing PMIs from Markit and also from ISM. The Markit PMI index showed a result of 59.2 points, which is higher than the December value of 57.1 and the preliminary estimate of 59.1 points. At the same time, the index of business activity in the manufacturing sector from ISM fell by 1.8 pp in January, to 58.7 points, while analysts had expected a reduction to 60 points.

In addition, a number of other ISM indicators for the manufacturing sector of the economy were published: price index, employment and new orders. Their values ​​amounted to 82.1 points, 52.6 points and 61.1 points, respectively. At the same time, the index of new orders was the only one of the three, which decreased compared to the December results.

Today in the US data for January on the index of economic optimism from IBD / TIPP will be released, and in the eurozone preliminary data on GDP for the IV quarter will be announced. In addition, a number of FRS representatives will speak today.

The EUR / USD rate is approaching the support line at 1.2000. Stochastic lines are approaching the oversold zone, which indicates a limited downside potential for the instrument in the short term.

This information is not investment advice.

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