-Yves Mersch, ECB Executive Board member
Fundamentals from Europe's largest economy were expected to take centre stage on Friday, as the Federal Statistics Office released its report on retail sales for April. Moreover, that was one of the final pieces of puzzle for the ECB, hence, it was expected to have a strong impact on the single currency.
In fact, the data was mixed, and the EUR/USD currency pair simply bounced back from major level at 1.36 and was fluctuating around this threshold following the release of the data. Retail turnover in Europe's powerhouse fell 0.9% in real terms on a monthly basis in April, following a 0.7% drop a month earlier, and missing analysts' expectations of a 0.2% growth. On a yearly basis, however, the indicator posted a 3.4% gain, accelerating from the previous period and surprising markets to the upside. Furthermore, the turnover in retail trade during the first four months of 2014 was already higher 1.2% in real terms and 2.0% in nominal than it was in the corresponding period in 2013. Retail sector is a primary gauge of consumer spending, partially reflecting inflationary pressure and being an important part of GDP.
Despite recent shocks and disappointment, Germany is still serving as the pillar of the Eurozone recovery, as its economic output rose 0.8% in the first quarter, and 2.3% on a calendar-adjusted basis.
© Dukascopy Bank SA