Fundamental Headlines
• Report Says G-20 Still Protectionist – Wall Street Journal
• US banks to repay rescue funds– Financial Times
• Obama presses banks to boost lending - Financial Times
• Dollar Rises on Economic Recovery Signs as Greek Government Bonds Decline -Bloomberg
• Banks Hoarding Cash in Europe Drive Treasurers to Record Bond-Market Sales -Bloomberg
EUR/USD – German investor confidence fell for a third straight month to 50.4 from 51.1 as the reality of a moderate recovery set in. Sentiment was more upbeat then economists had expected with early forecast for a fall to 50.0. Nevertheless, troubles in Greece and Austria have raised concerns over financial stability in the region. Austria has nationalized the lender Hypo Group Alpe Adria to avoid another bank collapse that could have cast doubt over Austria's and Germany's backing of public banks. Any threat to the financial system will go a long way toward derailing investor outlook. To discuss this and other ideas visit the EUR/USD forum.
GBP/USD – Consumer prices in the U.K. accelerated at a faster pace than the 1.8% economists had expected in November . Inflation jumped to 1.9% from 1.5% led by higher fuel and transportation costs. Core prices also rose at the same pace led by a 3.8% increase in food costs. Chancellor Darling predicted following last week’s pre-budget release that inflation would reach as high as 3.0% in early 2010 before falling again. The report showed inflation exceptions of 1.75% in 2010 and 1.50% in 2011 which is in line with the BoE’s position that prices will remain volatile over the short-term but lower on a linger term basis. Therefore, the central bank may ignore current appreciation in determining monetary policy as they look to provide liquidity and promote growth. Policy makers have left the door open for further quantitative easing measures despite signs the economy will produce positive GDP in the fourth quarter. To discuss this and other ideas visit the GBP/USD forum.
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