The final reading for 4Q German GDP confirmed that growth for the period was flat but significant revision in the breakdown changed the picture for the economy. Domestic demand was revised lower to -2.1% from 1.3% with imports dropping 1.8% as consumers continue to retrench.
Fundamental Headlines
• Wary Consumers Crimp Retail Outlook – Wall Street Journal
• Fed to Get $200 Billion Boost – Wall Street Journal
• Monetary policy to the fore as Bernanke testifies – Financial Times
• Bernanke Likely to Confront Concerns on Second Jobless Recovery in Decade – Bloomberg
• Greece Is Holding Back 10-Year Bond Sale in Game of `Chicken,’ Ignis Says – Bloomberg
EUR/USD – The final reading for 4Q German GDP confirmed that growth for the period was flat but significant revision in the breakdown changed the picture for the economy. Domestic demand was revised lower to -2.1% from 1.3% with imports dropping 1.8% as consumers continue to retrench. Exports remained strong at 3.0% beating estimates of 1.9% despite a downward revision from the initial reading of 3.4%. Strong demand from abroad could offset domestic weakness propelling the recovery forward. Indeed, Industrial new orders for the Euro-zone in December unexpectedly increased by 0.8% led by a 7.0% increase in capital goods. Economists were looking for a 1.0% pullback following the month’s prior 2.7% gain-which was revised higher from 1.6%. Consecutive months of strong demand for machinery and equipment, bodes well for future growth and a sign that optimism is improving. However, the current troubles of Greece hadn’t raised concerns at that time which could translate into weakness going forward. To discuss this and other topics, please visit the EUR/USD forum.