First, US housing starts and building permits both fell by more than 50 percent in January from a year earlier to their lower levels ever, with record keeping having begun in 1955. At the same time, import prices fell negative for the sixth straight month in January while the annual rate hit a fresh record low of -12.5 percent, thanks to a stronger US dollar and lower commodity costs. GBP/USD range was 1.4095 -1.4298 and EUR/USD range was 1.2515-1.2640
The Euro continued to test the 1.2500 on the downside level but the lack of fresh news helped that support to hold firm and range trading emerged. How the emerging Eastern European Banking crisis plays out will direct the Euro in the short term.
As the global economic downturn continues to spread throughout the euro-region, the outlook for growth and inflation for the Euro-Zone remains bleak, and as conditions are expected to only get worse, the European Central Bank could be forced take aggressive steps over the coming months in order to steer the economy out of a deepening recession.
Sterling maintained a slightly bullish tone with the market once again buying the dip towards 1.41. February CBI Orders weakened to -56 vs. -45 forecast. Also released the MPC minutes showed a 8-1 vote for the rate cut with Blanchflower calling for a bigger cut. Trading was fairly range bound with a low of1.1.1205 and a high of 1.1351.