Consumer Confidence Deteriorates Further in Germany, Sending the EUR/USD Lower - Forex News by FX Leaders
German GfK Consumer Confidence Indicator

Consumer Confidence Deteriorates Further in Germany, Sending the EUR/USD Lower

Posted Wednesday, January 27, 2021 by
Skerdian Meta • 2 min read

The coronavirus restrictions have been increasing in Germany in recent weeks, which is hurting the economy, with the exception of manufacturing, since large production facilities remain open. But, the smaller businesses are suffering, and consumer confidence is turning lower.

In fact, consumer confidence has been negative since April last year, but after an improvement in summer, it began weakening again in autumn, and today’s report is showing another decline. The EUR/USD turned lower after that report, losing more than 50 pips.

 

Germany February GfK Consumer Confidence Report

  • February GfK consumer confidence -15.6 points vs -7.9 expected
  • January GfK consumer confidence was -7.3 points; revised to -7.5

German consumer morale has dipped for the fourth month in a row as tighter lockdown measures continue to weigh on the sentiment as we head towards February. This is the lowest reading since June, and it doesn’t provide much confidence to start the new year. GfK notes that:

“Closing large parts of the retail sector has hit the propensity for consumer buying just as hard as it was hit during the first lockdown in spring last year. In other words, the recovery that many had hoped for this year will be postponed.”

That’s not really a good outlook for the German and Eurozone economy as a kick-off to Q1.

Comments by ECB policymaker, Klaas Knot

  • ECB has tools to counter euro appreciation if needed
  • ECB is monitoring strengthening the euro
  • Euro strength would take precedence for ECB if it threatens inflation outlook
  • ECB taking a holistic view on financing conditions
  • ECB hasn’t reached lower boundary, still room for rate cuts
  • Too early to talk about exit from low rates
  • There should be room for optimism after the summer
This is knocking the euro a little lower on the day, with the EUR/USD falling to 1.2120, creeping below its 200-hour moving average. There is also a slight dollar bid across the board, as we see commodity currencies ease to session lows on the day as well.
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About the author

Skerdian Meta // Lead Analyst
Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
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