The euro moved lower vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.3325 level and was capped around the $1.3475 level. European Central Bank President Trichet spoke at the Bank for International Settlements meeting today and said The global economy will slow down significantly in 2009 with the industrialized economies having negative figures. It is also noted that 2010 should be the year of the recovery. The ECB is expected to reduce its official interest rates by 50bps on Thursday to a record low of 2%. German government officials will convene tonight to discuss the next fiscal stimulus plan that is expected to be worth up to €50 billion over two years. More than one million Germans may lose their jobs this year, according to economists, and push the unemployment rate above 9%. The ECB confirmed commercial bank deposits held at the ECB surged to a record €315 billion, an indication that banks have an increasing reluctance to lend funds to each other. Eurogroup chairman Juncker said he wants to pressure eurozone financial institutions to increase their lending activity. In U.S. news, traders are closely monitoring a possible request by President-elect Obama to ask Congress of the remaining US$ 350 billion of the US$ 700 billion bailout fund. ECB officials including Quaden and Liikanen pressed the case for the central bank to adopt greater supervisory powers, following recent comments from Trichet. Euro bids are cited around the US$ 1.3055 level.
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