Euro Slides as Weak Q4 Data Take Shape
The euro fell in early European trading Friday, weighed by signs of weakness in the region’s two largest economies.
EUR/USD traded at $1.1027, down 0.1%, while EUR/GBP fell 0.2% to 0.8398.
First up, German retail sales slumped 3.3% in December, a much weaker number than expected, suggesting the country’s shoppers reined in their consumption in the final month of last year.
Retail sales are a volatile indicator, but this disappointing number came as a surprise after the GfK sentiment indicator suggested on Wednesday that consumer morale in the euro zone’s largest economy was healthy.
Earlier Friday, official data showed the French economy unexpectedly contracted in the final quarter of last year, with GDP shrinking 0.1%, the first time it has contracted since Emmanuel Macron took over as President.
This was much weaker than expected, as economists on average had forecast growth of 0.2% in the quarter.
France has been hit by a wave of strikes amid protests against Macron’s controversial proposed pension reforms.
Preliminary data for eurozone GDP are due at 1000 GMT. The French numbers may be partly offset by better-than-expected ones out of Spain, where GDP grew 0.5% rather than the 0.4% expected.
Sterling meanwhile ticked up, after consumer confidence hit a 16-month high in January, on the day that the U.K. formally leaves the EU. GBP/USD was at a three-week high of $1.3140.