When are the German Retail Sales and how could they affect EUR/USD?
The German Retail Sales Overview
The Federal Statistics Office of Germany, Destatis, will publish the Retail Sales report on Friday at 07:00 GMT.
Germany's Retail Sales are expected to remain consistent at a 0.2% increase month-over-month (MoM) in October. The annual Retail Sales are also anticipated to remain consistent at 0.2%.
How could the German Retail Sales affect EUR/USD?
The EUR/USD pair could erase daily losses and extend its gains if German Retail Sales beat expectations. Softer data may have a limited downside impact on the Euro (EUR), as ECB minutes signaled policymakers prefer holding rates steady amid uncertainty, with some seeing no need for further easing. Traders await Unemployment and flash Consumer Price Index (CPI) data from Germany due later in the day.
The EUR/USD pair may regain its ground as the US Dollar (USD) could struggle amid growing expectations of a Federal Reserve (Fed) rate cut in December. The CME FedWatch Tool suggests markets are now pricing in over an 87% chance of a 25-basis-point rate cut at the upcoming December meeting, a sharp rise from the 39% probability seen just a week earlier. Traders are also anticipating three additional rate cuts by the end of 2026.
Technically, the EUR/USD pair holds modest losses near 1.1590 at the time of writing, halting its three-day winning streak. The market bias is still active as the 14-day Relative Strength Index (RSI) is positioned slightly above the 50 level. The immediate barrier lies at the 50-day Exponential Moving Average (EMA) of 1.1606, followed by the monthly high of 1.1655, which was recorded on November 13. On the downside, the immediate support appears at the nine-day EMA of 1.1571. Further declines would prompt the EUR/USD pair to test the three-month low of 1.1468.
German economy FAQs
The German economy has a significant impact on the Euro due to its status as the largest economy within the Eurozone. Germany's economic performance, its GDP, employment, and inflation, can greatly influence the overall stability and confidence in the Euro. As Germany's economy strengthens, it can bolster the Euro's value, while the opposite is true if it weakens. Overall, the German economy plays a crucial role in shaping the Euro's strength and perception in global markets.
Germany is the largest economy in the Eurozone and therefore an influential actor in the region. During the Eurozone sovereign debt crisis in 2009-12, Germany was pivotal in setting up various stability funds to bail out debtor countries. It took a leadership role in the implementation of the 'Fiscal Compact' following the crisis – a set of more stringent rules to manage member states’ finances and punish ‘debt sinners’. Germany spearheaded a culture of ‘Financial Stability’ and the German economic model has been widely used as a blueprint for economic growth by fellow Eurozone members.
Bunds are bonds issued by the German government. Like all bonds they pay holders a regular interest payment, or coupon, followed by the full value of the loan, or principal, at maturity. Because Germany has the largest economy in the Eurozone, Bunds are used as a benchmark for other European government bonds. Long-term Bunds are viewed as a solid, risk-free investment as they are backed by the full faith and credit of the German nation. For this reason they are treated as a safe-haven by investors – gaining in value in times of crisis, whilst falling during periods of prosperity.
German Bund Yields measure the annual return an investor can expect from holding German government bonds, or Bunds. Like other bonds, Bunds pay holders interest at regular intervals, called the ‘coupon’, followed by the full value of the bond at maturity. Whilst the coupon is fixed, the Yield varies as it takes into account changes in the bond's price, and it is therefore considered a more accurate reflection of return. A decline in the bund's price raises the coupon as a percentage of the loan, resulting in a higher Yield and vice versa for a rise. This explains why Bund Yields move inversely to prices.
The Bundesbank is the central bank of Germany. It plays a key role in implementing monetary policy within Germany, and central banks in the region more broadly. Its goal is price stability, or keeping inflation low and predictable. It is responsible for ensuring the smooth operation of payment systems in Germany and participates in the oversight of financial institutions. The Bundesbank has a reputation for being conservative, prioritizing the fight against inflation over economic growth. It has been influential in the setup and policy of the European Central Bank (ECB).
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