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“The release of weaker than expected German economic data has become a familiar sight,” note Rabobank’s Senior FX Strategist Jane Foley.

Key quotes

“Over the past few weeks the January IFO survey, December factory orders, PMI and November production numbers are among the releases pointing towards slowing growth. The view held by many economists at the end of the year that the German economy would bounce back from very weak growth in Q3 as the auto manufacturers adapted to new regulation has become difficult to defend.”

“By November signs had started to emerge that the slowdown in the manufacturing sector was passing over to services. In the whole of the second half of last year Germany barely grew and, faced with a potential negative impact from Brexit in addition to the US-China trade dispute, the market is highly sceptical of ECB guidance that policy is on course to be tightened this year. Indeed, given the severe pressure on the Italian economy, speculation of additional liquidity from the ECB this year is widespread.”