Euro Reaction Muted As German Producer Prices Climb Unexpectedly

By David Schutz,

THE TAKEAWAY: Germanproducer prices rose more than expected in March -> Economicgrowth remains primary concern in Germany , but inflation fearsare on the rise -> Immediate Euro reactionmuted

German producer prices came in above expectations for the month of March, the German stats bureau revealed today. Producer prices climbed 0.6% on the month versus the expected and previous 0.4%. The gauge registered a 3.3% gain from March 2011, more than the expected 3.1% and previous yearly number of 3.2%.

Despite (or perhaps because of) a policy emphasis on growth stimulus, inflation fears have seeped to the surface in Germany as property prices rise and monetary policy remains loose. Rising inflation in Germany could have widespread implications for the rest of the Eurozone given Germany’s size and influence in the 17-nation bloc.

Central bankers around Europe have recently stepped up inflation warnings as the region struggles to balance economic growth and price increase. The most recent Bank of England Minutes were the boldest perhaps, with MPC member Tucker describing recent news on inflation as “bad.” Upside CPI risks come from oil and commodity price increases.

The Euro’s reaction to the German news was muted. The single currency traded within yesterday’s ranges against the US Dollar and Japanese Yen,
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Original Article: http://www.dailyfx.com/forex/market_alert/2012/04/20/Euro_Reaction_Muted_as_German_Producer_Prices_Climb_Unexpectedly_.html

DailyFX is the forex news and research arm of FXCM (NYSE: FXCM), which provides currency trading and brokerage services and is an advertiser on TheStreet websites. Any opinions, news, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Currency trading involves significant risk of loss. Individual authors may hold positions in the currencies discussed in the article.

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