Oh, gee. EU inflation fell below the ECB target in December. Shocker.
Inflation has been in free-fall around the globe since the second half of 2008 began raising the prospects that consumer prices could follow asset prices into deflation. Every man and his dog has come to that conclusion except for a few dogs in Frankfurt who sit on the ECB board. Again, what was Trichet thinking when he led the market to expect a pause in rate cuts in January? It boggles the mind.
EUR/USD opens the New York session near its lows, down nearly 3 cents on the day at 1.3325 as the market takes the ECB to task for giving it a very bum steer.
Meanwhile, the euro-zone services sector shrank at its fastest pace on record in December. According to data released by research group Markit Economics Tuesday, the purchasing managers index for the euro-zone’s services sector fell to 42.1 in December from 42.5 a month earlier. That’s the sharpest fall in the survey’s ten-year history.