EUR

We had good data from the Germany yesterday with IFO
business climate, current assessment and expectations for February all coming
in better than expected.

Also some pressure may have been taken off Mario Draghi’s
shoulders yesterday after the Eurozone rate of inflation remained at 0.8%
beating forecasts of a drop to 0.7%. Recent speculation has been that a fall in
inflation may cause the ECB to lower interest rates further; a practice that
would typically devalue a currency.

EUR

We had good data from the Germany yesterday with IFO
business climate, current assessment and expectations for February all coming
in better than expected.

Also some pressure may have been taken off Mario Draghi’s
shoulders yesterday after the Eurozone rate of inflation remained at 0.8%
beating forecasts of a drop to 0.7%. Recent speculation has been that a fall in
inflation may cause the ECB to lower interest rates further; a practice that
would typically devalue a currency.

Despite the promising data, movements on the euro were very
limited, perhaps due to the fact that the Eurozone rate of inflation remains
well below the central bank’s target of 2%.

USD

Data from the US disappointed once again as Markit services
PMI fell shy of expectations as well as coming lower than the previous month.
The Dallas Fed manufacturing index also fell lower for February from 3.8 to
0.3.

Once again the recent bad weather in the states is being
touted as the principal reason behind this and thus as a result, because the bad
weather has already been priced in, movements on the US dollar were also very
minimal.

Today

Data from Germany this morning has revealed that economic
growth for the fourth quarter was 0.4%, higher than the previous estimate of
0.3%. As a result the euro has made marginal gains this morning.

Data from the BBA with regards to mortgage approvals for the
month of January in the UK may well give the pound a bit of a boost following
its losing streak of last week. Expectations are for approvals to have
increased to 47,900 from 46,500.

Consumer confidence and Richmond Fed manufacturing index
data is unsurprisingly set to weaken further in February. As above, given that
the bad weather is most likely priced in, we would expect limited movements on
the US dollar as a result.

Key Announcements:

9.30am – GBP – BBA Mortgage Approvals (Jan): Expected to
increase 47,900.

15.00pm – USD – Consumer Confidence (Feb): Expected to
decrease to 80.

15.00pm – USD – Richmond Fed Manufacturing Index (Feb):
Expected to decrease to 12.