According to the March survey,
- The willingness to save contributed to the moderate improvement in the headline indicator, falling 5 points to 12.4 points. Nonetheless, the 12.4 points continued to signal a lackluster outlook for consumer spending.
- Income expectations increased by 3.3 points to -1.5 points, remaining below levels before the war in Ukraine. The GfK attributed higher income expectations to plans to increase German pensions in the summer.
- Willingness to buy slipped by 0.3 points to -15.3, highlighting consumer jitters about the economy and job security.
- Economic expectations increased by 3.3 points to -3.1 points. However, economic expectations are still down 6.8 points year-on-year.
Consumer Confidence Impact on Expectations of a June ECB Rate Cut
The sub-components of the survey align with investor bets on an ECB June rate cut. A decline in willingness to spend could further dampen demand-driven inflationary pressures. Downward trends in consumer prices match ECB expectations of a softer inflation outlook.
The weak macroeconomic environment may continue to influence saving trends, limiting the effect of income trends on inflation.
EUR/USD Reaction to German GfK Consumer Climate Survey
Before the German GfK Consumer Climate numbers, the EUR/USD fell to a low of $1.08315 before rising to a high of $1.08520.
In response to the GfK Consumer Confidence survey, the EUR/USD rose to a high of $1.08528 before falling to a low of $1.08489.
On Tuesday, the EUR/USD was up 0.11% to $1.08491.