Morning Forex Fundamental: EUR

Morning Forex Fundamental: EUR

'The improvement in confidence indicators should have actually begun to be reflected in a positive production trend' - Thilo Heidrich, an economist at Deutsche Postbank AG

Consumer prices in Europe's largest economy expanded at slowest pace since December 2010, indicating weak domestic demand, as consumers are showing reluctance to increase spending. According to the Federal Statistical Office, German inflation grew by 1.5% in February compared with the same month of the previous year, and down from 1.7% growth in the preceding month. On a monthly basis, the inflation rate picked by 0.6% in the second month of this year, which was unchanged from January's reading. Destatis also showed that the wholesale price index annually jumped 1.4% in February, while monthly it edged up only by 0.1% in the same month. Earlier this month, data showed an improvement in consumers' sentiment, however, the recession in the Eurozone is still weighing on people's mood.

'The improvement in confidence indicators should have actually begun to be reflected in a positive production trend,' said Thilo Heidrich, an economist at Deutsche Postbank AG in Bonn. 'It's difficult to assess the state of the economy at the start of the year.'

'Exports to countries outside Europe play a central role in Germany's recovery,' said Andreas Scheuerle, an economist at Dekabank in Frankfurt.