US Morning Notes – USD mixed, Fed to end MBS purchases, EUR at 6 mo. low

Here are the latest Financial News:

FX Highlights

• The USD is trading mixed with the EUR pressured by Greek fiscal concern and FOMC plan to end MBS purchases, Greek EU ten year bond spread is at the widest level since Greece adopted the EUR in 2001, China’s central bank said the nation should not buy Greece’s debt, Fitch warns of possible downgrade of Portugal’s debt rating, GBP continues to outperform trading at a five-month high versus the EUR as UK Chancellor Darling touts deficit reduction, commodity currencies trade higher tracking firmer equity market trade and hawkish outlook from the RBNZ, JPY lower pressured by improving risk appetite as equities rally in reaction to President Obama’s tax cut proposals to boost the US economy and the Feds upgrade of its outlook for the US recovery, the FOMC January statement says the US economy is in recovery and the Fed is preparing for the end of extraordinary monetary stimulus
• Focus turns to today’s release of US jobless claims, durable goods and Bernanke’s confirmation hearing
• Japan’s retail sales declined by 1.2%, JPY lower
• EU January economic sentiment improves to 95.7 from 94.1, a reading of 92.4 was expected, German unemployment rate rose 0.1% to 8.2% in January, EUR lower
• UK Chancellor Darling says the UK has a plan to halve its deficit over the next four years and the UK has the biggest deficit reduction plan amongst the industrialized nations, GBP higher
• RBNZ says it plans to start removing stimulus around mid year
• FOMC January policy statement was slightly more upbeat about the economy, said the recovery will likely be moderate and it will allow some emergency lending programs to expire
• Mortgage applications declined by 10.9% last week
• PBOC official Zhu warns of risks of US carry trades
• US equity markets set to open higher, European equities 0.5% lower, Nikkei closed 162 points higher

Upcoming Events

• US - Thursday, initial jobless claims for week ending 1/23 will be released expected at 450k compared to 482k last week along with December durable goods expected at 2% compared to 0.2% last month
• CAN - Thursday, no major data is due for release in Canada today

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