Japanese Inflation Cools But Remains Above BoJ's Limit

[DailyFx]

Fundamental Headlines

• Bailout Negotiations in Disarray – Wall Street Journal
• WaMu Is Seized, Sold Off to J.P. Morgan, In Largest Failure in U.S. Banking History – Wall Street Journal
• Morgan Stanley suffers cash flight – Financial Times
• Lehman Won't Return Prime Broker Assets for `Weeks' PWC Says – Bloomberg
• Oil Leads Commodity Slide as Financial Rescue Package Stalls – Bloomberg

• EURUSD – Import prices in Germany slipped 0.8% in August, which was lower than the 1.0% decline anticipated by market participants. However, the annual rate continued to hold steady at the record high reading of 9.3%, which only supports the ECB’s hawkish bias that upside inflation risks remains high for the economy. The breakdown of the report showed that prices excluding energy increased 0.5% from the previous month, which suggests that the central bank will not lower rates for the rest of the year amid falling oil prices. However, ECB voting member Lucas Papademos warned that the financial crisis leaves banks throughout the Euro-Zone more susceptible to shocks and credit risks, and went on to say that the economic downturn may last throughout the rest of the year. Discuss the topic and your trade ideas in the EUR/USD Forum.

• USDJPY – Consumer price growth in Japan slipped to 2.1% from 2.3%, but continued to hold above the BoJ’s 2.0% limit for the second consecutive month. Meawhile, the core CPI, which excludes fresh foods, continued to hold steady at the record high reading of 2.4%. Despite inflationary concerns for the world’s second largest economy, BoJ Governor Masaaki Shirakawa reassured the markets that the economy will recover in the near-term as he expected upward price pressures to decline over the coming months. For more news and resources, visit the new Japanese Yen Currency Room.