Fundamental Headlines
· Bank of America to Get Billions in U.S. Aid – Wall Street Journal
· Goldman Finds a Way to Dole Out Cash – Wall Street Journal
· Nortel files for bankruptcy protection – Financial Times
· Abu Dhabi Wealth Fund Loss May Be $125 Billion, Saudi Overtakes – Bloomberg
· HSBC, UBS May Be Liable for Madoff Losses After Serving as Fund Custodians – Bloomberg
EURUSD – The European Central Bank lowered the benchmark interest rate by 50bp to 2.00% as expected, and may continue to ease policy further as price pressures allevitate. Nevertheless, the Euro-Zone consumer price index fell 0.1% in December, which lowered the annual rate of inflation to the two year low of 1.6% from 2.1% in the prior month. The breakdown of the report showed energy cost dropped 3.7% during the month, which was followed by a 0.7% increase in the previous month. Moreover, the core CPI dropped to 1.8% from 1.9% in November. Meanwhile, prices pressures in Germany cooled for the fifth consecutive month in December as the final CPI reading fell to its lowest level in more than two years, with the headline reading for inflation falling to 1.1% from 1.4% in November. Falling oil prices paired with the significant downturn in the global economy has helped to curb price growth, which should allow the European Central Bank to lower borrowing cost further as policy makers try to maintain the 2% target for inflation. Discuss the topic and your trade ideas in the EUR/USD Forum.
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