German producer price deflation worsens increasing pressure on ECB, ZEW watched

Producer price inflation in Germany was in the negative zone for the entire 2014, and at the end of the year, the rate fell to a four-year low, increasing pressure on the European Central Bank to further stimulate growth.

The ECB is scheduled to review its monetary policy on 22 January and the market has already priced in an expansion in its bond buying programme as the authorities have stated that they stand ready to act in order to bolster growth and inflation.

The EUR/USD slipped to 1.1568 on Tuesday from the previous close of 1.1609. The pair had touched an 11-year low of 1.1460 last week and is on track to hit levels like 1.1000 and lower as per technical analysis.

German producer price index fell 1.7% from a year earlier in December, its steepest fall since early 2010, and compared to the November rate of -0.9%. The consensus was for a 1.4% decline.

On a monthly basis, prices fell 0.7% after showing 0% in the previous month while the market had been expecting a 0.4% fall.

The next set of data from the eurozone is the ZEW survey for Germany and the region, due at 10:00 GMT. Expectations are for a better reading for January from last month's.

The eurozone ZEW economic sentiment has been forecast to have increased to 37.6 from the December level of 31.8 while that for Germany to have gone up to 40.0 from 34.9. The current situation index for Germany is seen at 14.9 from 10.0 recorded for December.