THE TAKEAWAY: German retail sales fall 2.8% in October -> Sharpest drop since early 2011 -> Euro higher following Draghi comments
German retail sales have fallen at the sharpest rate in a year and a half, as the picture worsens in the Euro’s biggest economy. Retail sales fell 2.8% in October, much worse than the expected 0.4% decline in sales and a reversal of September’s revised 0.5% rise in retail sales. Annually, retail sales were 0.8% lower than October 2011, according to the German Federal Statistical Office.
Germany has been suffering from the effects of the Euro debt crisis. The country’s GDP only grew by 0.2% in Q3, and just yesterday, unemployment was reported to have risen for the eighth straight month in November.
However, despite the worse than expected sales figures, the Euro did not react to the news in forex markets. In fact, the Euro rallied 30 points against the US Dollar shortly after, as ECB President Draghi began speaking on French television. Draghi said he expects a Euro recovery to come in the second half of 2013. EURUSD is currently trading above 1.3000, which could now provide support. Resistance could be provided at 1.3025, by the 76.4% retracement of the decline from October’s high to November’s low.
EURUSD 15-minute: November 30, 2012