German Retail Sales Tumble by 2.4% Ahead of Inflation Numbers

It is a busy day on the European economic calendar. Ahead of the European opening bell, German economic indicators kickstarted the day. German retail sales numbers were in focus.

In March, German retail sales tumbled by 2.4%, following a 1.3% decline in February, according to Destatis. Economists forecast a 0.4% increase. Year-over-year, retail sales were down 8.6%

After the disappointing German Q1 GDP numbers, today’s consumption figures will likely question hopes of Germany avoiding a technical recession.

EUR/USD Price Action to German Retail Sales

Before the German retail sales figures, the EUR/USD fell to an early low of $1.09674 before rising to a pre-stat high of $1.09946.

However, in response to the unexpected fall in retail sales, the EUR/USD rose from a post-stat low of $1.09832 to a high of $1.09903.

This morning, the EUR/USD was up 0.10% to $`1.09885.

Next Up

Later this morning, manufacturing sector PMI numbers for Italy and Spain and finalized PMIs for France, Germany, and the Eurozone will likely garner more interest. We expect Italy and the Eurozone’s PMIs to have more impact, assuming no material revisions to the French and German PMIs.

Beyond the headline PMIs, input and output price inflation and wage growth will influence.

However, while the manufacturing sector PMIs will draw interest, prelim euro area inflation figures will likely have the most impact on the ECB. Sticky inflation numbers would raise the bets on a 50-basis point interest rate hike on Thursday. Economists forecast Eurozone core inflation to hold steady at 5.7%.

With a busy economic calendar, investors should also monitor ECB member commentary. ECB Executive Board member Andrea Enria is on the calendar to speak today. However, investors should track the media for ECB comments.

Looking ahead to the US session, it is a busy day on the US economic calendar. The US JOLTs Job Openings and factory Orders will be in focus. We expect increased sensitivity to labor market stats ahead of the Fed interest rate decision.

Economists forecast job openings to fall from 9.913 million to 9.683 million. While the headline figure will influence, quit rates also need consideration. A sharp decline in the quit rate would signal deteriorating labor market conditions.

Away from the economic calendar, US corporate earnings will also influence market risk sentiment. Big names on the US earnings calendar include Pfizer Inc. (PFE), Starbucks Corp. (SBUX), and Ford Motor Co (F).