The inflation rate in Germany as measured by the consumer price index is expected to be 0.9% on an annual average in 2014 as compared with 2013. The harmonised index of consumer prices (HICP) for Germany  is expected to have risen by 0.8% in 2014 as compared with 2013.  However, consumer prices are not expected to have changed on November 2014, missing forecasts on 0.1% increase.

Tuesday's European part of the session was marked by Spanish and Italian Services PMI data. Spanish Services PMI strengthened during December to a reading of 54.3, from November’s 52.7, beating expectations on an incline to 52.9. Monthly growth has now been recorded for fourteen successive months, with latest data showing that the Financial Intermediation and Transport & Storage sectors were the best performers.

Italian Services PMI dipped to 49.4 in December from November’s 51.8, to signal a modest contraction in service sector output. Analysts were anticipating smaller decrease to 51.4. The headline index’s quarterly average was little-changed from the three months to September.

It was quite eventful European part of the session on Wednesday with German Retail Sales and Unemployment Change figures as well as Eurozone CPI and Unemployment Rate data. When adjusted for calendar and seasonal variations the November retail trade turnover in Germany was in real terms 1.0% than that in October 2014. Analysts were forecasting smaller increase by 0.2%. In nominal terms it was 0.7% larger than that in October 2014.

Number of unemployed in Germany decreased by 27,000, beating market expectations on a decrease by 2,000. This was a third consecutive month of decline. Roughly 43.1 million persons resident in Germany were in employment in November.

Eurozone CPI missed market expectations on no change and level of 0.0% and fell to -0.2% in December. Core CPI rose to 0.8%. This negative rate for euro area annual inflation in December is driven by a fall in energy prices (-6.3%, compared with -2.6% in November), while prices remain stable for food, alcohol & tobacco (0.0%, compared with 0.5% in November) and non-energy industrial goods (0.0%, compared with -0.1% in November). The only annual increase is expected for services (1.2%, stable compared with November).

Separate report on Unemployment Rate showed figures in line with market forecasts.The euro area seasonally-adjusted unemployment rate was 11.5% in November 2014, stable compared with October 20144, but down from 11.9% in November 2013. The EU28 unemployment rate was 10.0% in November 2014, down from 10.1% in October 2014 and from 10.7% in November 2013.

On Thursday, from Eurozone, Retail Sales figures were released. In November 2014 compared with October 2014, the seasonally adjusted volume of retail trade rose by 0.6% in the euro area. 0.3% increase was expected. In November 2014 compared with November 20134 the retail sales index increased by 1.5% in the euro area and by 2.6% in the EU28.

On Friday, from Eurozone, only French Industrial Production figures were released. In November 2014, manufacturing output decreased (–0.6%, after –0.1% in October). Output declined more moderately in industrial production as a whole (–0.3% after –0.7% in October). Analysts were anticipating 0.4% increase.

This week markets will be looking at:

Industrial Production (Wednesday 11:00)