German inflation falls to 0.1% – lowest since 2009

German HICP inflation falls to the lowest level of 2009 at 0.1%. This is hardly a positive number and below 0.2% expected. The  dramatic drop from 0.6% in November is easily attributed to oil prices, but they are not really alone.

EUR/USD is below 1.19. Can it confirm the break below the 2010 low?

Update: after the initial dip, EURUSD is back above 1.19, but isn’t going too far.

National CPI stands at 0.2%, also below 0.3% expected. Month over month, HICP  rose by 0.1% and national CPI  was unchanged – both also below predictions.

These low levels  mean that a scenario of deflation in the euro-zone  for 2014 cannot be ruled out. The data is set for release on Wednesday. It pressures the ECB to act.

For the month of December, Germany was expected to report a  significant drop in the already low HICP seen in November. Predictions stood on a national CPI level of 0.3% and the European standard HICP level of 0.2%. However, early data from the various German states seemed extremely low.

EUR/USD was trading at extremely low levels of just around 1.19. The 2010 low of 1.1867 was  briefly breached in the early hours of the week, on very thin trading. The break to levels last seen in 2006 was still not confirmed.

Here are 6 reasons why EUR/USD collapsed fast.