German PPI shows a 0.1% improvement in the monthly report for December

on Jan 20, 2020
Updated: Mar 11, 2020
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  • German PPI shows a 0.1% improvement in its monthly report for December.
  • Analysts were expecting the German PPI to remain unchanged in December.
  • German PPI is the first in a long streak of European data that failed to suggest economic stability.
  • Bundesbank estimates the German GDP to print at 0.6% in 2020.
  • EUR/USD touched the monthly low of 1.1075 level on Monday.

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Federal Statistical Office of Germany (Destatis) announced the monthly German Producer Price Index (PPI) on Monday. Providing insight into the costs associated with producing goods, the measure is widely used to test the strength of German exports.

Germany’s economy at large is largely dependent on its export market. To add to it is the tradition of the European Union following Germany in its steps that further highlights the importance of the monthly German PPI report.

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Analysts Were Expecting The Monthly German PPI To Remain Unchanged In December

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Destatis had announced the German PPI to have remained unchanged in November. Following November’s report, analysts had forecast a no change trend to extend into December as well. As per Monday’s report, however, the Statistics Office announced the German PPI to have improved by 0.1% in the last month.  

According to the experts, the German report may not have posted a massive improvement in December, however, it did come out to be the first after a considerably long streak of related European data that failed to suggest signs of economic stability. With Germany noting a slight improvement in its monthly PPI, the European Union is likely to mirror the same optimism in the upcoming weeks.

While the forex specialists are still recommending caution, Monday’s data, they added, does hint at an imminent EU recovery. The recent Bundesbank estimate has also highlighted that the German GDP may post at 0.6% this year that further strengthens the claims of an upcoming optimism in the EU economy at large. The German ZEW economic sentiment to be announced on Tuesday is expected to further clarify Germany’s economic state and contribute to making an informed analysis of how the EU is likely to respond.

EUR/USD Hit A Monthly Low Of 1.1075 On Monday

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The economic data failed to stir an aggressive move in the forex market on Monday. All in all, however, the EUR/USD pair dropped to 1.1075 level earlier in the day that marked the lowest daily level for the widely traded pair in almost a month. At the time of writing, the pair is exchanging hands at 1.1085. The U.S dollar index, on the other hand, was seen trading higher at around 97.70 level on Monday.

In the past three months, the pair has traded within a narrow range of 1.10 and 1.12. As per the technical analysts, keeping below the 1.11 level at the moment, EUR/USD currently has a strong negative tone and can be expected to decline further in the upcoming weeks if the U.S data continues to support the greenback.

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