German retail sales unexpectedly drop 1 in December.6%, followed by 2 in November.4% month-on-month decline。This data is in line with economists' forecasts for a 0% month-on-month increase in December..7% in sharp contrast。The unexpected slide supported market expectations of a recession in Germany's Q1 and sparked speculation of an April European Central Bank (ECB) rate cut.。

Analysis of the impact of the European Central Bank on retail sales data

Last week, the ECB left interest rates unchanged, but central bank governor Lagarde did not say clearly when the ECB would cut rates.。Instead, Lagarde focused on wage growth, highlighting concerns about consumer spending and demand-driven inflation trends.。

German retail sales data suggest demand-driven inflation environment is weakening。Notably, the decline in retail sales clearly supported market expectations of a recession in Q1 and an ECB rate cut in April.。German private consumption accounts for more than 50% of the economy。

European and American currency pairs react to German retail sales

EUR / USD rises to 1 ahead of German retail sales data.A high of 08482 followed by a drop to 1.Low of 08158。However, after the data was released, EUR / USD fell to 1.A low of 08148, before rising to 1.The high point of 08206。On Wednesday, EUR / USD fell 0.23%, reported 1.08203。

Upcoming Data and Decisions

Next, investors will keep a close eye on German unemployment and inflation data。If inflation data is lower than expected, it could fuel market expectations of an ECB rate cut in April。Economists predict annual German inflation in January from 3.7% to 3.0%。

However, more optimistic labour market conditions could support wage growth, a concern for the ECB.。Economists expect German unemployment to stay at 5 in January.9%。

From the U.S. side, January ADP employment change data and Q4 employment costs are also noteworthy.。More optimistic labor market conditions and better-than-expected wage growth data could dampen speculation of a March Fed rate cut.。

These figures will be of interest to investors。However, the Fed's interest rate decision, interest rate statement and press conference will be the main events of the trading day.。Economists expect Fed to leave rates unchanged at 5.50%, the focus will be on the rate statement and the press conference。