The euro moved lower vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.31905 level and was capped around the $1.3370 level. Federal Reserve Chairman Bernanke spoke today and said the incoming Obama administration’s proposed fiscal stimulus could provide a significant boost to economic activity. Obama yesterday asked the outgoing Bush administration to formally request the second US$ 350 billion tranche of bailout funds under the Troubled Asset Relief Program. Bernanke also indicated the current expansion of the Fed’s balance sheet is not technically quantitative easing and intimated the Fed will continue its various liquidity enhancement schemes. Traders sold the common currency on increasing speculation that Standard & Poors will downgrade the sovereign credit ratings of Spain and Greece. Germany formally announced its second fiscal stimulus package with this one valued at €50 billion. France may provide more than the €26 billion it has already committed to its stimulus program. Some traders believe the European Central Bank will cut its main interest rate by more than 50bps on Thursday. ECB President Trichet reported This is no time for complacency, current challenges are pressing and new challenges shall arise. Eurozone data released today saw German wholesale December prices fall 3.3% y/y, the sharpest decline since March 1999. Notably, German consumer price inflation fell in December for a fifth consecutive month to its lowest level in two years. In U.S. news, the U.S. November trade deficit narrowed to US$ 40.44 billion, its largest contraction in twelve years, while the U.S. deficit with China shrank to its lowest level in five months. Euro bids are cited around the US$ 1.3055 level.