German Wholesale Prices Down 2.8% in July

Highlights

• Inflation was in focus again this today, with German wholesale inflation figures drawing interest.
• The German wholesale price index fell by 2.8% year-over-year in July versus a 2.9% decline in June.
• Later today, investors should monitor the news wires for central bank chatter.

It is a relatively busy day on the European economic calendar. German wholesale inflation figures were in focus this morning. The weak demand environment has continued to weigh on output prices, sparking fears of a deeper ECB-fueled economic recession in Germany.

German wholesale inflation figures provided little comfort. In July, the German wholesale price index fell by 2.8% year-over-year versus a forecasted 2.6% decline. Wholesale prices declined by 2.9% in June.

According to Destatis,

• Wholesale prices of mineral oil products continued to weigh on the Indedx, tumbling by 20.8% year-over-year.
• There were also significant declines in wholesale prices for waste and scrap (-32.8%), grain, unmanufactured tobacco, seeds, & animal seeds (-21.4%), metals & ores (-18.3%), and chemical products (-16.5%).
• However, prices for fruit and vegetables were up 27.5%.
• There were also wholesale price increases for live animals (+27.7%).

While the wholesale price index fell by just 0.2% in July, month-on-month, the latest report continued reflecting a weak demand environment.

EUR/USD Reaction to German Wholesale Inflation

Ahead of the German wholesale inflation numbers, the EUR/USD rose to an early high of $1.09543 before falling to a pre-stat low of $1.09293.

However, in response to the wholesale inflation numbers, the EUR/USD fell from $1.09373 to a post-stat low of $1.09270.

This morning, the EUR/USD was down 0.15% to $1.09304.

Next Up

There are no euro area economic indicators to draw interest. The lack of economic indicators will leave central banks and Beijing in focus. Stimulus talk from Beijing would support riskier assets, while central bankers may need to tiptoe around the current risk-off sentiment.

However, No ECB or FOMC members are on the calendar to speak today, leaving chatter with the media to influence.

Later in the day, US consumer inflation expectation numbers could have more impact than usual.