Rumours of £22bn Greek aid package denied by German finance minister

US Dollar:

It seems people were getting a little ahead of themselves last week as the hike in discount rate , doesn’t neces¬sarily mean the Fed is going to raise the Fed funds rate, So Thursday’s reaction in currency markets was a little extreme. The Fed’s move to normalize its emergency lending terms is good for risk. This saw the dollar lose its grip against the majors since Friday's close and has now given up nearly two cents on the euro and over a cent against sterling. Global stock markets saw positive moves which were replicated in early morning Asian trade, adding substance to risk continuing across the board. This doesn't mean a move lower for the dollar is going to continue, as the stories spreading across Europe with debt worries looks set to stay in focus in currency mar¬kets for some time.
Data 13.30: Chicago Fed national Activity Index.


Pound:

A sigh of relief for cable watchers has been seen this morning as risk appetite spread through Asian trade and looks set to continue in European trade this morning. After the collapse of sterling against a raging dollar last week, a move in the pounds favour by close to a cent was welcome from sterling sellers as cable moved from Friday’s low of $1.5349 to $1. 5490 this morning. The other story doing the rounds today is the news that the Eurozone may have lined up a £22bn Greek aid package, which has lift the bearish view on the single currency. This saw GBP/EUR continue to go in favour against the pound as we hit 1.1345, but has man-aged to steam the move downwards. The second release of UK fourth quarter GDP due Friday, is expected to be revised higher in the week ahead as the preliminary estimate of just 0.1% growth previously seen. The Gfk consumer confidence survey, also due Friday, is forecast to remain unchanged after a surprise decline in Janu¬ary. However, anyone looking for bullish moves higher on the back of this may be disappointed, as the dark clouds spreading over Europe with debt worries could easily be blown over to the UK, on top of a potential hung parliament looking more likely in the up and coming general election. This nightmare case scenario for the UK economy, would be another nail in the coffin for an under-fire pound.
No major data.

Euro:

Monday has started positive for the single currency as markets are in a hopeful mood with investors casting aside worries about the US federal Reserve's discount rate hike and look towards a potential Greek aid deal—reported to be for around £22bn. With uncertainty from those two issues diminishing, the euro has found support and traded higher against both sterling and the dollar. Be aware however that any gains in the euro may be short lived and limited by ongoing concerns about the fiscal health of the weaker nations in the eurozone. Looking ahead to this week, Germany’s Ifo business expectations survey for February, due Tuesday, is forecast to rise despite the news that the economy stagnated in the final three months of 2009. Expectations are for the Ifo measure of German business sentiment to rise further in February, brining reassurance that a more sus¬tained pick-up in German activity is to come.
Data: Nada


General:
• This week, banks will be in focus as part-nationalized Lloyds and Royal Bank of Scotland announce their results and give an update on further losses from risky lending.

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GBP/USD	1.5443
GBP/EUR	1.1361
EUR/USD	1.3590
GBP/JPY	141.30
GBP/AUD	1.7205
GBP/NZD	2.2052
GBP/ZAR	11.8210
GBP/CHF	1.6631
GBP/CAD	1.6056
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