ECB economist sees inflation turning up by year-end

Leave it to the German chief economist of the ECB, Jurgen Stark, to see inflation lurking just around the corner. Disinflation and outright falls in prices will be seen at times this year, but there will be no generalized deflation, he says. Zero rates are undesirable for the ECB, he said. He refused to speculate on the size of any March cut, echoing his boss in saying there is no precommitment.

EUR/USD has slipped back into a range after drawing out selling interest from central banks between 1.2875 and 1.2985. Next up for the market is US trade data at 13:30 GMT. A continued sharp contraction in the trade deficit is expected as oil prices stay low amd demand for imports slumps dramatically.