Fed President Evans says extended period means 3-4 policy meetings!

• Yesterday was a light day in terms of financial data with no major economic reports released from the US. Overall the USD traded weaker, equity markets almost unchanged and commodities such as OIL and Gold closed at $81 and $1115. Fed President Evans was in the spot light and was reportedly commenting about the state of the economy and said that if economic circumstances change quickly then a change in policy could be very likely. He said that 'extended period' means 3-4 policy meetings. 2 year US Treasury yields traded between 0.89% and 0.87% yesterday and the USDJPY traded in a tight range as well between 90.45 - 89.75.
• In Europe we had more news coming from Fitch, a rating agency, saying that its negative outlook of Portugal remains and that a possible default should not be ruled out. Greek prime minister made a visit to Washington and met with US President Barack Obama. The meeting was not intended to ask for financial aid from the US however he did express to the President that Greece cannot continue to borrow at the current yields. IMF also said that the meeting with Papandreou was to discuss technical assistance; this can only add pressure to Germany as outside help may be considered as a blow of confidence against European solidarity. EURUSD price action yesterday was between 1.3636 - 1.3536.
•  In the UK we had Fitch again express concerns over the UK's deficit profile however said that it still remains within the AAA rating. They also expressed concerns about UK banks and that a wave of defaults may occurs if Government support is withdrawn. BoE Posen also spoke yesterday saying that QE has helped the UK economy and that if the need arises again further operations may be resumed. 
•  Today's the focus will turn to Germany's consumer price index expected to drop to 0.4 yy. Manufacturing production will be released in UK where 1.4% growth is expected for the month of January. In the US we have a number of mortgage related data, the Fed budget for February expected at $-222bln and Crude Oil Inventories for the week expected to drop to 2.1 mln barrels.

 Currency to watch out for: EURUSD & USDJPY

• § The EURUSD pivot point is at 1.3650 with a preference to enter into short positions at 1.3640
• § The USDJPY pivot point is at 89.70 with a preference to enter long positions at 89.75

 Today's calendar and market movers:

• § Germany Consumer Price index expected to drop to 0.4% for the year
• § UK Manufacturing Production for year expected to grow 1.4%
• § US Crude Oil Inventories for the week expected to be 2.1 bln barrels

 Equity Markets:

•  US equities closed positive yesterday with the DJIA and the SP500 closing 0.11% and 0.17% respectively.  The European bourses were mixed yesterday with the FTSE down -0.08% the DAX and the CAC closing positive at 0.17% and 0.17% respectively.  The NIKKEI and the HSI at the time of writing is -0.04% and 0.06% respectively.