US inflation for 2007 highest in 17 years.

US consumer prices increased 0.3% (0.2% expected) in December after a 0.8% gain in November, an indication that the inflation may slow down in 2008. 2007 inflation rose the most in 17 years - consumer prices rose 4.1%, highest rise since 1990. The core rate increased 2.4% after a 2.6% increase in 2006. The US economy is no doubt the key concern in financial markets including forex and stocks.

EUR/USD has retreated from 1.4920 and is now hovering around 1.4800. Yen crosses are all still going down; people are scrambling to get rid of their carry trades. There is a general feeling US stock markets could be bearish this year.