• The USD is trading at its highest level since June versus the EUR supported by concern about sovereign debt risk in Europe as CD's(credit default swaps) widened to a record 196bps spread in Portugal and the spread on Greek and Spanish bonds also widened, it's getting more expensive to buy protection against debt defaults in Greece and Portugal, European sovereign debt risk is the main focus of FX trade, the ECB leaves rate policy unchanged at 1%, EU fiscal trouble slow ECBs exit from crisis mode, GBP downside limited by BOE decision to pause its asset purchases program, the BOE however left the door open for future expansion of quantitative ease if economic conditions deteriorate, AUD traded lower pressured by report of weaker than expected retail sales and an unexpected rise in New Zealand's unemployment rate, JPY supported by a spike in risk aversion as equity markets decline, US equities set to open lower on debt fears
• Focus turns to today's release of US jobless claims , unit labor costs and productivity and factory orders and Canada's building permits and Ivey PMI
• MOF flows data for week ending January 30th shows Japanese investors large purchasers of foreign bonds, JPY higher
• Australia's December retail sales declined by 0.7%, December building approvals rose by 2.2%, New Zealand's unemployment rate climbed to 7.3% last quarter from 6.5% in the previous three months, AUD lower
• UK Halifax house price index rose by 0.6% in January, BOE holds monetary policy unchanged and will pause its asset purchases plan, GBP lower
• German industrial orders for December declined by 2.3%, German finance minister says the German economic recovery lost momentum after Q3, EUR lower
• Swiss December trade balance improved to 1.36bln, CHF lower
• An estimated 4.5mln US home owners home value has dropped below 75% of the amount owed on the mortgage, many of these homeowners may considering walking away from the loans, nearly 6mln foreclosures in last three years with 3mln more expected in 2010
• City of Phoenix passed a 2% tax on food (milk, meat and vegetables and other foodstuffs ) that will take effect on April 1st to try an close its 24mln budget gap
• Senator Grassley urged President Obama to call China a currency manipulator
• U.S. Senate is expected to unveil a jobs stimulus bill Thursday
• US equity markets set to open lower, European equities 0.5% lower, Nikkei closed 48 points lower

Upcoming Events

• US - Thursday, initial jobless claims for week ending 01/30 will be released expected at 460k compared to 470k last week along with Q4 unit labor costs and productivity expected at -2.5% and 6% respectively and December factory orders expected at 0.5% compared to 0.1% last month
• CAN - Thursday, December building permits will be released expected at 2.5% compared to -4.5% last month along with January Ivey PMI expected at 52.5 compared to 48.4 last month

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