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French Consumer Spending Craters

Last updated 1/22/2009 3:22 AM ET (GMT -5) 0 Comments - Add your comment

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Boris Schlossberg

Director of Currency Research, GFT

French consumer spending collapsed in  December contracting by -0.9% versus -0.2% expected as sentiment sunk to its worst level since 1972.  Despite the Christmas shopping season consumers in Europe's second largest economy kept their purse strings tightly shut as worries over the looming global recession dampened any urge to spend.

The news bodes badly for the rest of the Euro-zone as France and along with Germany remains the primary engine of growth for the rest of the region.  Not even the prospect of lower food and energy prices revived the spirits of French consumers who continue to conserve their cashflow in the face of escalating job losses that threaten their security.  Therefore Q1 of 2009 is shaping up to be especially challenging to French retailers is likely to result in greater contraction in GDP than currently forecast.

The EUR/USD however, shrugged off the news, as flow in the currency market tonight is primarily dominated by short covering and the resumption of some risk taking on the back of rebound in the Dow and a postive open in European equities.  If equities continue to remain well bid the EUR/USD could make another run to 1.3100 as the day progresses 

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About The Author

Boris Schlossberg began his Wall Street trading career more than 20 years ago at Drexel Burhnam Lambert. There, he traded nearly every type of financial product on the market in the U.S., from equities and options to stock index futures and foreign exchange. His innate ability to analyze market information and use it to trade has helped him become an industry-recognized, “go to” trading professional.

These days, whenever the markets move, many organizations turn to Schlossberg for his take on the situation. He is a weekly contributor to CNBC's Squawk Box and a regular commentator for Bloomberg radio and television. His daily currency research is widely quoted by Reuters, Dow Jones and Agence France Presse newswires and appears in numerous newspapers worldwide. Schlossberg has written for publications like SFO magazine, Active Trader and Technical Analysis of Stocks and Commodities. He is also the author of Technical Analysis of the Currency Market and the co-author of Millionaire Traders: How Everyday People Are Beating Wall Street at Its Own Game with Kathy Lien. He joined GFT in 2008.