European Retail Sales for February, both Year on Year and Month on month, came out worse than expected today at 0.1% and -0.1% from their expected values of 0.6% and 0.4%. The retail sales data is a measure of the changes in the Euro zone sales of the retail sector. The indicator is highly correlated with the amount that European consumers spend of their monthly salary on products; a higher than expected number will act positively for the European economy, while a lower than expected figure tends to have a bearish effect on the Euro.
Following the release of the data the Euro was little changed, remaining around the 1.4186 level oscillating by little more than +/- 5 pips. The market is in anticipation of the Euro zone interest rate that will be announced on Thursday at 12:45GMT – the rates are expected to rise by some 25 basis points to 1.25% after hawkish comments by policy makers in recent weeks. The interest rates are expected to keep rising in upcoming months – a view that has helped boost the Euro in recent weeks by over 200 pips, from last week’s low of 1.4020 to yesterday’s 5 month high of 1.4267.