Single currency still under pressure ahead of today’s E/Zone fin meeting

Pound:
Sterling closed out last week on a positive tone as a combination of 'risk on' mode returning to global markets helped push cable higher, and the Greek debt talks which were due to take place over the weekend saw traders take short position's on the euro. Cable gained over two cents last week as we traded over the $1.5550 level, after starting the week just over the $1.53 handle as traders sold the lower yielding dollar to the benefit of the pound. Against the euro we also saw gains but this week will remain choppy, with the Greek debt talks failing to come to any kind of conclusion, and another round of talks happening in Europe today, with a positive outcome on Greece's debt woes likely to push GBP/EUR lower, but if no positive news is heard, may work in the pounds favour.
No major data. Speaker 18.00: MPC's Posen.

Euro:
The euro fell for a second day on concern that Greece will struggle to reach an agreement with creditors to ease its debt burden. The 17-nation currency weakened before European Union finance ministers meet in Brussels today to discuss a Greek debt swap, new budget rules and a financial firewall to protect indebted states. The mild risk off tone at the start of the week was seen as markets remained cautious given the continued uncertainty over Greek debt, with talks being dragged out over the weekend and no agreement to be seen ahead of today’s Eurozone fin min meeting. There is some nervousness around the negotiations that are happening between Greece and its private-sector creditors, with mixed reports. There’s a bit of fresh uncertainty around that and that’s encouraging profit-taking on the euro. The euro fell 0.3 percent to $1.2891 as of 7:14 a.m. in London from $1.2931 in New York on Jan. 20, when it reached $1.2986, the highest level since Jan. 4. The common currency declined 0.3 percent to 99.30 yen. Bondholders negotiating a debt swap with Greece have made their “maximum” offer, leaving it to the EU and International Monetary Fund to decide whether to accept the deal, said Charles Dallara, who’s representing private creditors in the talks.
Data: E/Zone Finance Meeting & E/Zone Consumer Confidence.

Dollar:
The dollar closed out the week on the back foot Friday as some risk appetite was seen in global financial markets. That seems to have come to a halt as we start a new week, with the same old story of Eurozone debt worries and the news that no agreement was seen in Greece's debt talks over the weekend. The dollar has benefited on this as the safe haven currency was gobbled up. Looking ahead, the U.S. probably accelerated in the final three months of 2011 as Americans boosted spending and companies rebuilt inventories, economists said before a report this week. Gross domestic product, the value of all goods and services produced, rose at a 3 percent annual rate after advancing 1.8 percent in the previous quarter, according to the median forecast of 64 economists surveyed by Bloomberg News before the Commerce Department’s Jan. 27 release. Other reports may show gains in orders for durable goods and new home sales in Dec. Improved employment prospects helped make it easier for consumers, whose spending accounts for about 70 percent of the economy, to purchase new cars and buy more holiday gifts. While a slowdown in Europe is a risk to U.S. producers, a faster expansion may persuade Federal Reserve officials meeting this week to stay the course on monetary policy. The consumer has picked up and the U.S. economy still faces some headwinds, particularly from Europe, but the outlook is a bit more promising than it was a year ago.”
Data 15.00: Existing Home Sales

General:
•    Asian markets are closed and liquidity thin due to the Chinese Lunar New Year holidays.
•    The Aussie dollar may find some pressure on its shoulders soon as another official interest rate cut is looking more likely as new evidence shows price pressures are easing. Prices paid by business grew at their slowest pace in a year in the final three months of 2011, new figures today showed, underpinning hopes that an all-important inflation report due later this week will be even softer than forecast.

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