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German Consumer Confidence Improves But Caution Reigns in EUR/USD

Last updated 10/25/2011 3:07 AM ET (GMT -5) 0 Comments - Add your comment

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Boris Schlossberg

Director of Currency Research, GFT

The headline measure of GFK German consumer confidence report rose in October on strong labor market conditions but the underlying sub components deteriorated confirming  the slowdown in other economic data from  the region. The GFK index rose to 5.3 from 5.2 the month prior as German's income growth and propensity to spend rose as labor demand remained robust.

However economic expectations declined further with the index swinging into negative territory to -6.2 points from 4.8 in September. The regions’ debt crisis continues to weigh on the minds of the consumers   and curtail spending into the key Christmas season especially if the current round of negations amongst EU finance ministers fails to pacify the markets.

The EUR/USD was relatively quiet in Asian trade but sold off slightly into the European open giving up the 1.3900 figure as traders remained cautious ahead of tomorrow's final EU summit. Focus remained on Germany where Angela Merkel continued to lobby her coalition for approval    and with little other data on the docket, trading is likely to be driven by official rhetoric for the rest of the day. Unless the market hears fresh details with respect to the size of the EFSF that would boost sentiment, profit taking is likely to be the path of least resistance today with the pair  bouncing in a 1.3950-1.3850 range.

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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.