Retail sales in Germany unexpectedly declined in December, causing the Euro to struggle in gaining traction. This development comes at a time when trade within the European Union remains robust, with intra-EU trade accounting for 70% to 80% of trade activities. Only Serbia reports a lower share, with 57% of its exports and imports occurring within the EU. In response to economic conditions, the European Central Bank (ECB) cut interest rates by 25 basis points, bringing the deposit rate down to 2.75%. This move aims to bolster economic activity across the region.
The decline in retail sales in Germany, Europe's largest economy, has raised concerns about consumer spending and economic recovery. The Euro's struggle highlights broader economic challenges, as it seeks to stabilize amidst fluctuating market conditions. Despite these hurdles, intra-EU trade continues to support employment in the region and across the European Union. Over the last two decades, Central and Eastern European (CEE) countries have notably increased their trade activity as a percentage of GDP, demonstrating growing economic openness.
Most trade by CEE countries happens within Europe, further solidifying the EU's internal market strength. Throughout this week, CEE currencies have displayed remarkable stability and strength, reflecting resilience amidst global economic pressures. The long end of the yield curve moved downwards, with Romania's 10-year yields dropping to 7.4%, indicating positive signals for investors and policymakers in the region.
CEE countries have made significant strides in improving their current account and trade balance positions. These improvements contribute to a more stable economic environment within the region. The gold price made headlines by touching a fresh all-time peak of $2,800 during the early part of the European session. The upward trend in gold prices is expected to continue, driven by safe-haven demand amid geopolitical tensions and trade tariff threats from U.S. President Donald Trump.