FX.co ★ Fundamental Analysis, January 17, 2011

Descents have been recorded this morning in Asia due to steps taken this weekend by China and Singapore in order to chill off the local markets, as well as renewed concerns over the European debt crisis, causing the Hong Kong stock exchange to weaken by 0.3% and the Shanghai exchange to take a 2.1% dive after the Chinese central bank raised bank capital requirements. The Singapore stock exchange droped 0.2%, while the Japanese Nikkei is trading unchanged.

In the American macroeconomic sphere, the Consumer Price index climbed by 0.5% in December, the highest monthly climb since June 2009, due to a climb in energy prices. The core price index, excluding volatile food and energy prices, climbed by 0.1%. The rises in the CPI and core price index were in accordance with predictions. Fed chairman Ben Bernanke stated on this matter that he expects that inflation remains moderate, while the risk of deflation hitting the United States economy persists.

Europe's chief statistics bureau announced that inflation in Germany – the largest economy in Europe – rose by 1.9% in December as opposed to November's 1.6%. This is the quickest climb since October 2008. That said, the concerns over the European debt crisis continue to burden the markets. The Euro traded this morning at a 0.5% decline against the United States dollar, to a rate of 1.3330 United States dollars for one Euro. Today the European finance ministers are expected to meet and discuss dealing with the crisis. Last Friday Greece lost its last investment rating, having been downgraded by one level by the Fitch ratings agency, and reaching the level of BB+, considered a 'junk bond' level.