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What's today's news?

Tuesday, the Japanese yen extended its early Asian session's slide against its major opponents in late trading and slumped to multi-day lows against most of them.

The yen reached a 4-day low of 123.15 against the euro and 83.92 against the Swiss franc around 2:30 am ET and this may be compared to yesterday's closing values of 121.84 and 83.19, respectively. On the downside, the yen may find support around 84.9 against the franc and 123.6 against the euro.

Germany's consumer price index, or CPI, rose 0.8% year-on-year in January after an increase of 0.9% in December, the Federal Statistical Office said today. On a monthly basis, the CPI declined 0.6% versus 0.8% rise in the previous month. Thus, the statistical office confirmed preliminary inflation figures for January.

At the same time, a report from the Federal Statistical Office showed that the German foreign trade balance showed a surplus of EUR 136.1 billion in 2009, smaller than the EUR 178.3 billion in 2008. According to provisional results of the Deutsche Bundesbank, the current account surplus stood at EUR 119.4 billion in 2009, down from EUR 165.2 billion.

The yen also dropped to a 4-day low of 140.27 against the pound and 89.65 against the US dollar by this time, compared to 139.13 and 89.27, respectively hit late New York Monday. If the domestic unit declines further, it may test support around 90.0 against the buck and 141.6 against the pound.

Thirty-two percent of surveyors in the United Kingdom expect house prices to rise rather than fall, the January issue of the Royal Institution for Chartered Surveyors' survey revealed today. That was higher than the 27 percent that analysts had been expecting following the 30 percent total in December.

At the same time, retail sales in the united Kingdom were up just 1.2 percent on year in January, the British Retail Consortium said today, the weakest annual gain in 15 years. Retail sales had risen a revised 3.2 percent on year in December.

Against the Australian dollar, the Japanese yen fell to a 5-day low of 78.19 around 2:40 am ET. The aussie-yen pair, which finished Monday's trading at 77.2, is presently worth 78.02 with 79.6 seen as the next likely target level.

Moving well off from early Asian session's 4-day high, the Japanese currency drifted lower to 83.94 against the Canadian dollar and 61.89 versus the New Zealand dollar around 2:30 am ET. The yen that closed yesterday's deals at 61.0 against the kiwi and 83.01 versus the Canadian dollar is currently quoted at 61.7 and 83.7, respectively.

Across the Atlantic, the US Commerce Department is due to release its wholesale inventories report at 10:00 am ET. Economists expect wholesale inventories at the end of December to show a 0.5% increase.

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German exports rose on an annual basis for the first time in fourteen months in December, data released by the Federal Statistical Office showed Tuesday. However, the year 2009 saw exports falling the most since 1950.

As global demand started picking up amid the economic recovery, German exports rose 3.4% year-on-year in December. That was the first rise since October 2008 and followed a 3.6% decline in November.

"Today's numbers highlight once again that the German economy can almost always rely on a helping hand from the export sector," said Carsten Brzeski, senior economist at ING Bank. "The road might be bumpy but it is the road to recovery and not a dead-end street."

On a monthly basis, exports continued to rise for a fourth month, with 3% rise in December. That was in contrast to a 0.1% drop economists had expected. In November, overseas sales grew 1.1%.

According to Commerzbank analyst Simon Junker, the trend in foreign trade is still clearly upwards and contributed positively to economic growth in the fourth quarter. In the coming months, the analyst expects exports to climb again, although the dynamics should slow down.

Suggesting that domestic demand is likely to recover in the near future, the pace of decline in imports slowed to 6.5% annually from 15.1% in November. Moreover, imports rose 4.5% month-on-month, the first rise in three months.

Colin Ellis, an economist at Daiwa Capital Markets Europe, said today's data could reflect some normalization in imports. The economist sees the German economic recovery to be disproportionately dependent on exports during 2010 amid subdued consumer spending.

The trade surplus in December was EUR 13.5 billion, down from EUR 17.2 billion excess in November. Provisional results of the Deutsche Bundesbank showed a current account surplus of EUR 20.6 billion for December, up from EUR 17.8 billion surplus in the previous month.

Further, Destatis reported that Germany exported commodities to the value of EUR 803.2 billion in 2009, down 18.4% over 2008. Similarly, imports dropped 17.2% to EUR 667.1 billion. The statistical office said it was the biggest decline recorded in foreign trade in relation to both imports and exports since 1950.

The foreign trade balance showed a surplus of EUR 136.1 billion in 2009, narrower than the EUR 178.3 billion in the previous year. The current account surplus during the period was EUR 119.4 billion, smaller than EUR 165.2 billion surplus logged in 2008.

"As regards the world's top exporting nations, Germany as the largest exporter was overtaken by China in 2009," Destatis said. Citing information from the Chinese Ministry of Commerce, Destatis said Chinese exports amounted to US$1,201.7 billion, while German exports totaled US$1,121.3 billion in 2009.

Also on Tuesday, the statistical office confirmed January's consumer price inflation at 0.8%, slightly down from 0.9% recorded in December.

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The euro lost ground against most of its major counterparts during European session on Thursday.

Against the British currency, the euro slipped to 0.8759 at 9:00 am ET, down from a new multi-week high of 0.8844 hit at 4:15 am ET. The current quote for the euro-pound pair is 0.8761, compared to yesterday's close of 0.8811.

The euro traded in a tight range against the Swiss franc. As of now, the euro-franc pair is trading near yesterday's close of 1.4666.

The euro lost ground against the U.S. dollar. At 9:00 am ET, the euro fell to 1.3653 against the U.S. currency. As of now, the euro is worth 1.3669 against the U.S. dollar. The euro-greenback pair closed yesterday's trading at 1.3734.

The euro showed a downtrend against the Japanese currency as well. At 9:10 am ET, the euro declined to 122.49 versus the yen. At present, the euro is trading at 122.72 versus the yen, compared to yesterday's close of 123.61.


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Risk averse traders continued to flock to the relative safety of the dollar on Friday, with the world's de facto reserve currency enjoying a solid bid amid growing speculation the steam has run out of the global recovery.

The buck hit a fresh 9-month high again the euro, which has been hammered amid concerns that Greek debt problems will spread to other fragile economies without meaningful intervention on the part of more stable euro area nations.

However, with the eurozone struggling with anemic economic growth, major economies may be hesitant to drastically boost spending in order to prevent the Greek contagion.

European officials offered vague promises to support Greece on Thursday, and are expected to detail an aid package sometime next week.

Meanwhile, encouraging US retails sales data was overshadowed by news that China is engineering a soft slowdown of its economy.

A report from the Commerce Department on Friday showed that retail sales increased by 0.5 percent in January following a revised 0.1 percent decrease in December.

Adding to worries about the sustainability of the global recovery, China, now the engine of global growth, hiked its reserve requirement on banks in order to stem lending.

Even with the Dow taking back most of a 160 point drop in early dealing, the dollar sustained most of its gains against the euro.

The dollar rose to 1.3531 versus the euro, its highest level since last May, then backed off a penny to 1.3650.

At the same time, the buck extended this week's run of choppy trading versus the sterling, bouncing back and forth near 1.5600. The buck touched an 8-month high of 1.5533 a week ago, but has since risen no further.

The dollar also remained directionless against the yen, hanging around the Y90 mark.

The eurozone continued to lag behind the global economic recovery in the fourth quarter of 2009. Gross domestic product across the eurozone grew by only 0.1% in the fourth quarter compared to the previous three-month period.

The German economy, Europe's largest, unexpectedly stagnated in the fourth quarter as final consumption expenditure and investment failed to support growth.

Better-than-forecast French growth figures may have prevented the eurozone economy from sliding back into contraction mode.

Greece, saw its output shrink by 0.8% in the fourth quarter, casting doubts about the Greek public's willingness to accept cost cutting measures aimed at getting the nation's debt under control.

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The euro traded mixed against other major currencies during early European deals on Monday. The euro pared its recent gains against the pound and the franc, but declined against the yen. However, the euro recovered its recent losses against the U.S. dollar.

European stocks rose today in early trade, with banks and commodity stocks taking the lead as investors awaited the euro zone finance ministers meeting.

In early deals, Germany's DAX climbed 0.5%, France's CAC-40 index jumped 0.8% and U.K.'s FTSE 100 index rose 0.7%.

The euro pared its recent gains against the pound during early European session on Monday. The euro slipped to 0.8673 at 4:00 am ET, moving down from 0.8705 hit earlier. Presently, The euro-pound pair is trading near Fridays' New York session close of 0.8674.

The euro lost some its late Asian session gains versus the Swiss currency during early European deals on Monday. Moving down from a high of 1.4681 touched at 12:55 am ET, the euro reached a low of 1.4655 at 4:30 am ET. As of now, the euro is trading at 1.4656 against the franc, compared to Friday's New York session close of 1.4666.

On Monday, against the yen, the euro extended its Asian session's downtrend during early European deals. At 4:30 am ET, the euro fell to 122.43 against the yen. The current quote for the euro-yen pair is 122.45, compared to Friday's close of 122.67.

The euro recovered its recent losses against the U.S. dollar during early European deals on Monday. The euro drifted higher to 1.3610 at 4:15 am ET, moving up from 1.3594 hit earlier. As of now, the euro is worth 1.3608 against the greenback, compared to Friday's close of 1.3623.

The U.S. financial markets are closed today in observance of Presidents Day.

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The European Central Bank currently has no plans to raise interest rates as there is no imminent risks of inflation and it would withdraw emergency support measures gradually, Governing Council member Guy Quaden said Wednesday.

There is "no reason to raise interest rates at the moment," Quaden said in Brussels. "We don't see any risks for the moment."

The central bank has kept its interest rate at a record low of 1% since May 2009 to support the economy in battling a severe downturn. The bank also injected billions of euros to maintain liquidity in the region's banking system.

With regard to wiping out emergency measures, Quaden, who also heads the National Bank of Belgium, said a gradual approach would be the best. He noted that a delayed withdrawal may bring negative consequences. According to the central banker, the Eurozone recovery is fragile as it was led by huge fiscal stimuli and unemployment would keep rising as firms continue to suffer.

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The dollar was little changed versus other major currencies Monday morning in New York, holding onto most of its strong recent gains versus the struggling euro.

The buck hit new 9-month highs last week amid speculation the Federal Reserve may be getting set to tighten monetary policy following a surprise move to raise the discount lending rate to banks.</p>

With Europe mired in debt problems and experience sluggish growth, the dollar has surged over the past few months.

The buck was at 1.3590 versus the euro this morning, having touched as high as 1.3440 last week.

Against the sterling, the dollar was steady at 1.5456, pulling back a penny from Friday's highest mark since last May.

At the same time, the dollar drifted slightly lower versus the yen, easing to 91.20 from a monthly high above 92.

With no major economic data on tap for the day, traders will focus on Fed Chairman Ben Bernanke's appearance before the House Financial Services Committee.

Later this week, the markets will be treated to preliminary fourth quarter growth figures, as well as data on housing and employment.

In economic news from overseas, Greece will meet its very ambitious deficit-reduction goals and the country's government is prepared to take additional measures, Greek central bank governor George Provopoulos said in an interview with Bloomberg.

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In early European deals on Monday, the euro eased from an early Asian session's multi-day highs against the dollar, the yen and the pound as investors remain concerned about sovereign debt problems.

Research firm DBS said today that the euro's direction this week depends on two key events, namely the Greek bond issue and the Federal Reserve Chairman Ben Bernanke's testimony.

Early this week, Greece is expected to announce details on its plan to issue 10-year bonds, while Bernanke is expected to deliver his semi-annual congressional testimony on February 24 and 25.

The firm is of the view that the euro will resume its depreciation if the Greek bond issue causes widening of Greek credit default swap and if Bernanke relays more optimism about recovery, while also showing patience on rate hikes.

The euro that rose to an 11-day high of 0.8819 against the pound in early Asian deals on Monday showed choppy trading in late Asian deals but fell during the early European session. As of now, the euro-pound pair is worth 0.8795, down from Friday's close of 0.8805.

Against the franc, the euro declined to 1.4649 at 4:25 am ET, from an early Asian session high of 1.4668. As of now, the euro-franc pair is trading near Friday's close of 1.4649.

Monday morning in Asia, the euro strengthened to an 18-day high against the Japanese currency, but pared gains during late trading and extended its slide in early European deals. At 4:30 am ET, the euro-yen pair was worth 124.71, compared to Friday's close of 124.67.

Moving down from an Asian session's multi-day high of 1.3665 against the U.S. dollar, the euro touched a low of 1.3618 at 4:35 am ET. At present, the euro-dollar pair is trading at 1.3617, compared Friday's close of 1.3587.

Looking ahead, San Francisco Federal Reserve President Janet Yellen is scheduled to speak at the University of San Diego at 10:30 am ET.

Meanwhile, the Federal Reserve Chairman Ben Bernanke is scheduled to appear before the House Financial Services Committee hearing on "Prospects for Employment Growth: Is Additional Stimulus Needed?" at 11 am ET.

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Reserve Bank of Australia deputy governor Ric Battellino said on Tuesday that the country was better prepared to deal with a mining boom than in the past because of its floating exchange rate and tighter monetary and fiscal policy frameworks.

But the rapid emergence of China and India means the current mining surge could be a lot longer than previous booms, he said.

In a speech to the Sydney Institute, Battellino said the current boom began in 2005 before being held back by the global financial crisis and that now, the dynamics of a boom are starting to reappear.

"History tells us that mining booms are periods of significant economic change and that they can pose complex challenges for policy makers," said Battellino.

"Key among these is the need to ensure flexibility in the economy and maintain disciplined macroeconomic policies in order to contain the inflationary forces generated by the boom."

Battellino did not elaborate on the outlook for monetary policy, with the RBA's March rate setting meeting fast approaching.

"In the 30 years since the previous boom, the Australian economy has developed in ways that should make it better able to accommodate the surge in mining activity that is currently under way," said Battellino.

The central banker said the floating exchange rate is a key difference from the past while goods and labor markets are more flexible, and monetary and fiscal policy frameworks are more "soundly based".

"This gives grounds for confidence that we can do better this time, but the task will not be without challenges," Battellino said.

Australia was the first major economy to raise interest rates in the aftermath of the global financial crisis.

The country's economy has been shielded from the worst of the worldwide recession, thanks to continuing strong demand from China for its abundant mineral resources and active stimulus measures implemented on the domestic front.

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