Euro weakens as German retail sales fall 1.2% ahead of inflation data

  • The euro weakened against sterling and the yen as markets assessed weak German consumption and awaited inflation data.
  • German real retail sales fell 1.2% month on month in July versus a 0.5% forecast, while EUR/JPY traded near 157.20 yen.
  • The data may influence expectations for further ECB easing, with upcoming euro-zone inflation and GDP figures and the ECB’s mid-December meeting in focus.

The euro weakened in separate trading developments against the British pound and Japanese yen as investors assessed soft German economic data and awaited preliminary consumer price figures. Germany’s real retail sales fell 1.2% month on month in July, versus a 0.5% analyst forecast, and declined 2.2% year on year, while EUR/GBP slipped 0.2% to around 0.8450. In another session, EUR/JPY traded near 157.20 yen, down from 157.80, ahead of Germany’s preliminary inflation release for the current month. The retail-sales decline reinforced concerns about weak consumer demand and expectations that the European Central Bank may cut rates further, while the inflation data could either support prolonged tight policy or revive expectations for earlier cuts. The pound has benefited from relatively resilient UK data and the Bank of England’s cautious easing approach, while the yen has drawn safe-haven demand and speculation about gradual Bank of Japan policy normalization.

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