FX.co ★ Fundamental Analysis, December 13, 2010

European leaders will meet this week in order to discuss ways to resolve the Eurozone's debt crisis, which has led to a bailout of Ireland and Greece. They are expected to agree on a set mechanism for bailing out debt-stricken Eurozone countries. The German Minister of Finance said in an interview that the leadership of Eurozone countries is united in the belief that the joint coinage is beneficial to them, and that a retreat to national currencies would be in error. He added also: “The Euro is beneficial to us all, and we will successfully defend it. He who bets on the Euro falling will fail, for the Euro will not fall.”

Last week Wall Street locked on rising indexes, with the S&P 500 rose to a high of more than two years based on the publication of positive macroeconomic data in the United States. By the end of last week's final trading day, the Dow Jones Industrial Average had climbed by 0.3% to a level of 11,407 points, whereas the S&P 500, as we said, locked on the highest level since September 2008, after climbing 0.6% to a level of 1,239 points, whereas the NASDAQ index added 0.8% to a level of 2,637 points.

In the American macroeconomic sphere, the consumer confidence index published by the University of Michigan climbed in December to a level of 74.2 points as compared to 71.6 points in November. The climb was sharper than predicted by analysts that had expected a level of 72.5. Furthermore, the United States Department of Commerce had stated that the U.S. Trade deficit declined by more than 13% in October to a level of 38.7 billion dollars. Economists expected that the deficit would remain fixed at the level of 44 billion dollars.

Further in global macroeconomics, the Chinese central bank announced that it would increase capital requirements on Chinese banks in an attempt to cool down the local economy. The bank announced a 0.5% increase in requirements, the third this month and the sixth since the beginning of the year in an attempt to slow the racing inflation in the world's second largest economy.