Yesterday's better than employment report from Germany shows it remains an outperforming outlier in Euro Zone. German economy despite facing worst of migrant crisis managed to expand both its manufacturing and services sector. Job gains were much higher (+14,000) than expected. Compared to that Greece's manufacturing expanded marginally for first time in December, since last quarter of 2014. Unemployment in both Greece and Spain remains higher than 20%.

German assets on the other hand remains outlier too.

German 10 year yield is lowest among Euro Zone, trading at 0.51%. Compared to that some of the Euro area countries such as Greece (+802 bps), Portugal (+197 bps), Spain (+115) Spain are trading at significant premium.

So Germany poses a key longer run policy challenge for ECB, mentioned below -

• When to scale back stimulus - Even if ECB restrain itself from acting further, key challenge will be how it withdraws its current stimulus and when. Full recovery in countries like Greece, Cyprus , Spain could take much longer horizon, waiting for which might lead to overheating German economy. German unemployment at 4.5% could lead to higher wage inflation due to tightening of labour market.

• With stimulus gone, bond market and economy drop into turmoil - With Support from ECB's monetary stimulus gone, weak economies might fall into jeopardy and bond gains could reverse, pushing periphery into turmoil leading to further divergence in German and rest of Euro Zone bond yields.

As of now, these concerns may not pose much of a headache for ECB but it is surely to define ECB's policy mix going ahead.

Which in turn would mean elevated uncertainty and volatility for Euro, which is now trading 1.073 against Dollar.