Euro’s rally against Dollar and Yen is apparently capped by some weak economic data in the European session so far.
German retail sales dropped -4.3% mom in December, way below expectation of -0.5% mom. That’s also the fastest decline in 11 years since 2007. The decline was partly due to a strong November with pre-Christmas shopping and one-off discounts. But it’s yet another warning that the growth engine of Eurozone is slowing down quickly. Also from Germany, unemployment rate was unchanged at 5.0% in January. But unemployment dropped less than expected by -2k only.
From France, CPI dropped -0.4% mom in January. Annual rate slowed sharply from 1.6% yoy to 1.2% yoy. INSEE noted that “The fall in inflation should result from a pronounced deceleration in the prices of energy. Services prices should rise at the same pace as in December and those in manufactured products should drop barely less than in the previous month. Contrariwise, food and tobacco prices should gather pace.”
