U.K Deficit Maintains Record Levels, Euro-Zone Recovery Shows Signs of Slowing

Fundamental Headlines

• China Seeks to Tame Boom – Wall Street Journal
• Obama to set limits on bank trading – Financial Times
• Eurozone economic recovery slows - Financial Times
• China's Growth Accelerates to Fastest Since 2007 as Bubble Risks Increase – Bloomberg
• Greece Won't Need Rescue Package to Reduce Deficit, Papaconstantinou Says - Bloomberg



GBP/USD – Great Britain posted a deficit of 15.7 billion pounds in December down from 18.7 billion the month prior and below estimates of 19.0 billion. However, it remains the largest shortfall reported in the last month of the year since record keeping began in 1993. Concerns are that as the government continues to spend in order to revive the economy that the building deficit will put the country’s AAA sovereign rating in jeopardy.  The BoE has used $200 billion pounds top purchase assets in order to inject liquidity into the market. The economy is expected to have posted its first quarter if growth since the crisis began at the end of 2009. Indeed, the CBI industrial trends survey showed that the outlook for exports improved to 19-the highest since 1995.The reading for total orders continued its upward trend rising to -33 from -42 , the highest since December, 2008. To discuss this and other topics, please visit the Pound Forum.

EUR/USD – The Euro-zone purchaser manger’s index slipped to 53.6 from 54.2 as weakness in the service sector offset gains in manufacturing, which could be a sign the recovery is slowing. Economists were looking for a flat reading for the combined gauge but the service sector dropped from 53.6 to 52.3, missing forecast for an improvement to 53.8. Manufacturing surpassed estimates of 51.9 with a print if 52.0 on continued strong demand from China, which has become the largest consumer of automobiles.  To discuss this and other topics, please visit the Euro Forum.