The HCOB Composite Purchasing Managers’ Index (PMI) for Germany dropped from 51.5 to 51.3 in December. This small decline shows a slight slowdown in the manufacturing and services sectors. This change highlights ongoing challenges for the private sector amid economic uncertainties. Analysts will keep an eye on future data to see how it affects Germany’s economy and if a long-term slowdown is starting.

Fxstreet Currency Updates

Updates from FXStreet reveal shifts in currency pairs like USD/JPY and USD/INR. The USD/JPY may see unstable trading between 156.20 and 157.20, while the USD/INR is falling as the US dollar loses ground. Tensions in Venezuela appear to be easing, and the Pound sterling is rising as market sentiment improves. Meanwhile, the EUR/USD decline is tied to disappointing services activity in the Eurozone. More detailed analysis can be found at FXStreet.com. New data from December 2025 shows that Germany’s economic activity was stalling at the end of last year. The drop in the composite index to 51.3, while still in the growth range, indicates reduced momentum. This trend is crucial for us as we plan trades for the first quarter of 2026. This slight slowdown increases pressure on the European Central Bank (ECB), especially since Eurozone inflation dropped to 2.4% in the closing months of 2025. After the ECB cut rates in the fourth quarter of last year, this weak German data supports further easing. We should watch for a potential rate cut as soon as March.

German Economic Indicators

For our stock investments, this suggests a cautious approach to German stocks. We might consider buying put options on the DAX index to protect against a possible decline in the coming weeks. If upcoming industrial production data confirms this weakness, the index could revisit the lows from last autumn. In the rates market, this situation makes bond futures more appealing. With the yield on German 10-year Bunds down to about 2.1%, we expect it to drop even further as rate cut expectations grow. Taking a long position in Bund futures is a straightforward way to act on this view. This economic divide is likely to affect currency markets, particularly the Euro. As the US economy remains robust, Germany’s continued struggles will likely weigh on the EUR/USD pair. We can use currency options to prepare for a potential drop below the 1.05 support level that held for much of late 2025. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now