Germany’s economic recovery losing steam?

 German economy losing steam; Other world financial tusseles

The Bank of Canada on Tuesday warned it’s currency could “add a significant further drag on growth.” The BoC kept its target for its overnight rate at 0.25%. Also announced was a new schedule for the bank’s asset-purchase program, part of its quantitative-easing measures to boost liquidity and support the economy.

The euro traded at $1.4259 versus the dollar, down 0.9%. Losses were extended after the Mannheim-based Center for European Economic Research, or ZEW, said its expectations index declined more than expected in January, to 47.2 from 50.4. 

Greece taking steps to make things right

Joaquin Almunia, the European commissioner for economic and monetary affairs, said Monday night that Greece’s budget plans appear “adequate” but required further study by European Union policy makers. 

On Tuesday, ratings company Moody’s said Greece’s plan to cut its deficit from more than 12% of gross domestic product last year to below the E.U.’s 3% target by 2012 was relatively well designed for at least the short term. The Greek government’s ability to implement the measures, however, remained a key uncertainty, the agency said.

Moody’s kept a negative outlook on Greece. “Market skepticism on the outlook for Greece is unlikely to ease until some improvement in the budget is noted,” said Jane Foley, research director at Forex.com.

The British pound, meanwhile, trimmed gains after initially jumping versus major rivals on U.S. food giant Kraft’s successful bid for U.K. confectioner Cadbury and an unexpectedly large jump in December consumer prices.

Inflation jitters

The euro slipped to another four-month low versus the British pound at 87.18 pence. In recent action, the single currency was off 0.8% at 87.24 pence. The pound was up 0.1% versus the U.S. dollar to $1.6351.

The pound had spiked higher versus the dollar after the U.K. Office for National Statistics said British annual inflation rose 2.9% in December, exceeding expectations for a robust 2.5% rise.

The figure boosts expectations the Bank of England won’t extend its 200 billion pound ($326.7 billion) quantitative-easing program when its Monetary Policy Committee meets Feb. 4.

The money-creating program has been seen as a drag on the pound.

The dollar also rose up 0.6% versus the Japanese currency, trading at 91.20 yen.

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