Wall street journal reports on a possible bailout for Greece of up to Eur 30 bln!

•  Friday saw a weakening USD as existing home sales was released and surprised the market with a sudden drop to 5.05mln units sold for January. Chicago Fed President Evans was expressing his views that ''extended period'' means about 6 more months. Other important releases on Friday were the Q4 GDP which was revised up to 5.9% and the highest Chicago PMI reading since April 2005 at 62.6. The USD also weakened on the back of bail out chatter that Germany is considering a Eur30bln package for Greece. EURUSD price action was between 1.3550 - 1.3683.
•  In Europe on Friday a Wall street Journal report said that German and French officials are indeed considering a Eur30bln package for Greece. The report said that state owned companies may take part in the bail out so as to avoid the regulatory hurdles that do not allow Governments from owning the debt of other EU states. EU inspectors who visited Greece last week said that Greece will miss its target of cutting the Greek deficit by 4% unless more spending cuts and tax hikes are introduced. The ECB meets on Thursday with no major changes in policy expected.
•  In the UK the main focus is on the BoE and if further QE measures will be undertaken. The market is almost certain that it will happen however the uncertainty as to when and how much is causing plenty of volatility in the market. Currently record short positions are reported by the CFTC amounting to almost 81,000 contracts. Although GBPUSD may be vulnerable to plenty of short covering, such a large amount of short bets been placed in such a short period of time indicate that the market as a whole is anticipating further GBPUSD weakness. GBPUSD price action on Friday was between 1.5319 - 1.5128.
•  In the financial calendar today the market will focus on PMI reports from Germany, Euro Zone and the United Kingdom. All economies are expected to show PMI improvements, the report is a forward looking indicator showing the expectations of Purchasing managers and how they see future activity. We also have the unemployment rate released today expected to increase to 10.1%. In the US the main highlight the ISM manufacturing prices reports which is expected to decline to 57.5.

 Currency to watch out for: EURUSD & USDJPY

• § The EURUSD pivot point is at 1.3685 with a preference to enter into short positions at 1.3675
• § The USDJPY pivot point is at 88.80 with a preference to enter long positions at 88.85

 Today's calendar and market movers:

• § Euro zone PMI manufacturing for February expected at 57.1
• § UK PMI manufacturing for February expected 56.1
• § Euro Zone unemployment for January expected at 10.1%
• § US ISM manufacturing for February expected to drop to 57.5

 Equity Markets:

•  US equities closed positive on Friday with the DJIA and the SP500 closing 0.04% and 0.14% respectively.  The European bourses were positive yesterday with the FTSE up 1.45% the DAX and the CAC closing positive at 1.20% and 1.87% respectively.  The NIKKEI and the HSI at the time of writing is 0.45% and 1.86% respectively.