Eurozone Retail Sales Rose 17.8% Month Over Month in May

Eurozone Retail Sales Rose 17.8% Month Over Month in May
July 7, 2020

 

The euro dollar gained ground against the greenback yesterday after the release of German factory orders data that signaled a rebound in May. The robust increase in the Eurozone retail sales is also another reason for the euro dollar’s uptrend. Notably, the market discarded the weak Sentix investor Confidence data. In the US, services activities picked up as indicated by the IHS Markit’s data. However, the reading still showed a contraction. However, the ISM non-manufacturing data from the US was impressive. Still, the market gave importance to the factory orders and retail sales data from the EU and pushed the euro dollar upwards. In the past 24 hours, the EUR/USD pair rallied from a low of 1.1240 to a high of 1.1345.

According to German statistical organization Destatis, factory orders rose by 10.4% m-o-m in May, following a 26.2% decrease in the earlier month and below economists’ estimates of 15.1% increase. However, factory orders were down 29.3% in May 2020, compared with the same period a year earlier. In April, factory orders fell 36.9% on a y-o-y basis.

Interestingly, compared with February, the month before prohibitions were enforced due to the COVID-19 pandemic in Germany, fresh orders declined 30.8% in May. While domestic orders rose 12.3%, overseas orders increased 8.8% in May, compared with earlier months. Fresh orders from the Eurozone increased 20.9%, and new orders from the rest of the countries inched up 2%, compared with April.

During May, intermediate goods manufacturers recorded 0.4% increase in fresh orders, compared with April. Capital goods manufacturers posted 20.3% increase in orders compared with last month. Likewise, consumer goods orders increased 4.7% m-o-m in May. Despite the improvement, fresh orders in the automotive sector were 47% lower than in February.

In another news report, the European Sentix Investor Confidence decreased 18.2% in June, following a 24.8% decline in May and worse than 10.8% slump anticipated by economists.

In the meanwhile, data published by the Eurostat indicated a 17.8% m-o-m increase in retail sales in May, following a 12.1% decrease in April, but higher than the Consensus estimate of 15% growth. On a y-o-y basis, the retail sales fell 5.1% in May.

Notably, the volume of retail trade rose 38.4% in May. Likewise, non-food products posted 34.5% increase in volume in May. Automotive fuels reported 30.2% increase in volume. All the EU member states posted an increase in the volume of retail trade, barring Bulgaria, where the figures remained unaltered. Luxembourg and France posted the sharpest increase of 28.6% and 25.6%, respectively.

In the US, the final IHS Markit services business activity index jumped to 47.90 in June, from 37.50 in May and slightly above the reading of 47 anticipated by economists. The reported final reading was slightly above the flash estimate of 46.7. The remarkable easing in contraction was primarily due to the reopening of business by service providers and a progressive increase in consumer demand. The rate of decrease was the slowest in the four consecutive months of decline. Notably, inflationary pressure rose for the first time since February as both input costs and output charges increased.

According to the US Institute for Supply Management, the non-manufacturing PMI (purchasing managers’ index) increased to 57.1 in June, from 45.4 in the earlier month. A reading above 50 indicates expansion and vice-versa. June marks the first month of expansion after two consecutive months of contraction.

The impressive factory orders data from Germany and a strong increase in the Eurozone retail sales are expected to keep the EUR/USD pair range-bound with slight bullish bias in the near-term.

Technically, the euro dollar is receiving support at 1.1120. The next resistance is anticipated only near 1.1550. Additionally, the momentum indicator is also making new highs. Therefore, we are anticipating the EUR/USD pair to move up in the short term.

EUR - technical analysis - 7th July 2020

Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.

Richard W

Richard W

Richard is the guy who know everything there is about the financial industry, working in a top firm for over 15 years, he will give the lowdown on some of the biggest companies in the world


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