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Forex News: Bank of Canada May Have More Room To Cut As Core CPI Drops

Friday, 25 January 2008 11:38:32 GMT

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Written by Terri Belkas, Currency Analyst

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Fundamental Headlines
 
·    USDJPY –Consumer prices in Japan surged 0.8 percent in December from the year prior – the fastest rate in more than nine years – as rising oil and other commodity prices are passed through from producers. However, with the downside risks for growth in the country remaining a major issue, the BOJ is highly unlikely to raise rates from their current level of 0.50 percent. For more news and resources, visit the new Japanese Yen Currency Room.
·    EURUSD – German consumer confidence went little changed in February, as the GfK index held at a nearly two-year low of 4.5. It appears that resilient labor market conditions are helping to offset worries about mounting inflation and deterioration in the financial markets, especially after the unemployment rate dropped to a 14-year low of 8.4 percent in December. With the ECB’s focus remaining centered on price stability, the monetary policy committee may remain unabashedly hawkish. Discuss this and other topics related to the Euro in our EUR/USD Forum.
·    USDCAD –The BOC’s core CPI measure fell more than expected in December at a rate of 0.3 percent, dragging the annual rate down to a two year low of 1.5 percent and indicating that the central bank may consider cutting rates at their next meeting in March. Indeed, with a possible US recession putting Canadian export growth at risk, the BOC has already reduced the overnight lending rate by 50bp since December. For more news and resources, visit the new Canadian Dollar Currency Room or discuss the currency in the USD/CAD Forum.
 
·    Washington Sets $150 Billion Plan To Jolt Economy (link) – Wall Street Journal
·    Japanese Prices Rise At Record Pace (link) – Financial Times
·    Italy Is Cast Adrift As Prime Minister Prodi Resigns (link) – Bloomberg
·    Scottish & Newcastle Accepts Carlsberg-Heineken Offer (link) – Bloomberg
·    Fed Didn't Know About SocGen Loss on Jan. 21, Official Says (link) – Bloomberg

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tb  Written by Terri Belkas, Currency Analyst, Forex Capital Markets LLC, DailyFX.com
 
Tell us what you think about this article. Email tbelkas@dailyfx.com
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