Euro Pressured After Survey Says German Consumer Confidence To Weaken

By David Schutz,

THE TAKEAWAY: German GfK predicts weakening consumer confidence -> energy costs, inflation seen weighing on purchasing power -> Euro weakens against US Dollar

German consumer confidence will diminish in May as rising energy costs weaken household purchasing power, the German GfK institute said today. The May GfK consumer confidence index is set to drop to 5.6% from a revised 5.8% in April. Markets had expected a May reading of 5.9%, based on the median forecast by a team of economists.

Rising energy prices were seen weighing on households’ spending power as inflation creeps up on Europe threatening to torpedo economic recovery. I nflation fears have seeped to the surface in Germany as property prices rise and monetary policy remains loose. Rising inflation in Germany could have widespread implications for the rest of the Eurozone given Germany’s size and influence in the 17-nation bloc.

The Euro weakened somewhat versus the US Dollar following today’s GfK release. As of this report the single currency was trading back down towards multiday consolidation levels in the 1.3100 area.
DailyFX is the forex news and research arm of FXCM, Inc (NYSE: FXCM), which provides currency trading and brokerage services and is an advertiser on TheStreet websites. Any opinions, news, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Currency trading involves significant risk of loss. Individual authors may hold positions in the currencies discussed in the article.

Original Article: