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French Consumer Spending Weighs on Euro

Last updated 10/28/2011 3:42 AM ET (GMT -5) 0 Comments - Add your comment

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Boris Schlossberg

Director of Currency Research, GFT

French consumer spending surprised to the downside as demand fell unexpectedly in September. Households in Eurozone second largest economy spent -0.5% less in September than in August versus expectations of 0.1% rise.   On a year over basis consumer spending contracted by -1.3%.

Consumption is the largest driver of French economy and today’s data bodes badly for growth into the end of the year. French consumers have been clearly affected by the expanding credit crisis in the region and today’s news will only exacerbate  concerns that French finances may deteriorate into Q4 of this year.

The EUR/USD was modestly lower on the report trading towards the 1.4150 level at the start of European trade. With no other economic news on the docket, the pair may see some quiet consolidation in European session today as markets digest yesterday’s massive 200 point gain in the aftermath of the EU summit. 

With political drama now resolved, attention may turn back to the economic fundamentals  in the region which have been problematic at best over the past several weeks. Therefore, if the eco data from the EZ does not start to show some improvement the EUR/USD could begin to unwind its recent gains as markets start to price in the possibility of an ECB rate cut over the near term.

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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.