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German Producer Prices Remain Unchanged in July

German Producer Prices Remain Unchanged in July

Benjamin Spier, Technical Strategist

THE TAKEAWAY: German producer prices remain unchanged in July -> A rise in energy prices bring an end to two months of declining input costs -> Euro corrects higher

German producer prices were unchanged in July, ending two straight months of declining industrial input costs. However, the 0.0% price change was less than the expected 0.3% rise. July’s producer prices were 0.9% higher than July 2011, a drop from June’s annual 1.6% rise in prices, according to the German Federal Statistical Office.

The index for producer prices remained at 117.8 for the second month. The input costs for basic goods dropped 0.3% in July, while energy input costs rose 0.4%. The lack of price growth could be attributed to the weakening German economy.

German GDP growth fell to 0.3% in the second quarter, as the economy struggles with the Euro debt crisis. Yesterday, Chancellor Angela Merkel said that her country is in line with the ECB’s approach to defending the Euro. She even implied that she would support the ECB buying the sovereign debt of struggling nations, as long as it came with conditionality. Her most recent comments raise hopes that the central bank will be able to take the necessary steps to help the Euro-are climb out of its current crisis.

The Euro took a small gain against the US Dollar following the producer prices release, rising towards 1.2360, but the move may have been correcting from earlier session losses and unrelated to news. Yesterday, EURUSD bounced back above 1.2300 and an upward trend line, resistance might be found next at 1.2400.

German_Producer_Prices_Remain_Unchanged_in_July_body_eurusd_daily_chart.png, German Producer Prices Remain Unchanged in July

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.