FinMin Noda has also joined in, saying that he’s watching the impact on the stockmarket very closely. I wonder if he has developed a squint after all this watching.

I think the GBP/USD is in a wide consolidation phase roughly between 1.53/1.63 and this phase may well continue for some weeks to come. I remain bullish however and I think the break higher may come a bit sooner than that. A break above 1.63 would open the way for a move towards the 200-week MA at 1.7220 and a measured move to 1.7300.

Yesterday it was all doom and gloom and risk aversion yet today there are plenty of reasons to be cheerful, according to the UK Telegraph. We are a fickle lot.

I don’t hear much information generally on the NZD and if I do I ignore it, as it always seems to do the opposite of what I think it’s going to do.

I’ll pass it on nonetheless and you can do with it as you please.

• Big buying interest reported with stop-losses above .7810, .7820 and .7840
• No exact information on where the dip-buying is placed, but thought to be in low .76s

NZD/USD is currently trading around .7720 and it looks a bit ‘toppy’ on the short-term charts so perhaps we may see the dip first.

• Canada : November GDP up 0.40 %, RMPI up 4.20% and IPPI up 0.70%
• US December Personal Income up 0.40%, Personal Spending up 0.70% and Core PCE Price Index 0.0%
• Chicago PMI comes in at 68.8
• Portuguese Debt Agency Chief says no reason the country won’t be able to finance itself in the market in 2011
• Muslim Brotherhood rejects new Egyptian government; calls for continued protest
• Canada: Flaherty says biggest risks to the Canadian economy are weak US recovery and instability of some European countries
• Netanyahu: Israel following Egyptian scenario with concern, fears that what happened in Iran could repeat in Egypt
• Fed’s Lockhart: Sees hopeful signs of sustained recovery in 2011
• More Lockhart -  Short term have mixed feelings about the level of savings as want to see more consumer activity
• US Senate Energy Panel Chairman Jeff Bingaman warns Egypt protests could affect US access to affordable energy supplies
• Egypt’s limited reserves raise fears of financial crisis
• Europeans: We want a German central banker–FT
• S&P 500 finished +0.75%, Gold $1330/oz and Oil was up almost 3% at $92/bbl

Occasionally we see days where the rationale for moves escape us. After Friday’s sell off as the Egyptian crisis developed, we have seen a significant reversal of risk; equities have been strong, gold has settled around $1330 and Crude has regained levels not seen since October 2008.

Strong month-end demand in the NY fix for currencies provided a further filip, seeing the dollar test the lows of the session.

EUR/USD traded up to1.3739, initially aided by month-end buying of EUR/GBP. However aggressive selling of the latter pair ultimately drove the EUR/USD back down to current levels 1.3685 and EUR/GBP to a low of 0.8332.

USD/JPY saw good semi-official support at 82.00 and dipped by a few points when a large order at the fix was executed. Similarly USD/CHF was supported most of the session around 0.9400 only to break briefly to test 0.9370.

AUD/USD also was bought to last week’s higher level at 0.9989 but failed to sustain its momentum. The AUD did not see the same amount of currency flows that the JPY and GBP enjoyed.

The surprise mover that unusually tested both sides of the market was the USD/CAD. Firstly, on strong growth and inflationary data, the pair dropped to 0.9963 only to be reversed on comments by Minister Flaherty concerned with employment and the potential of not passing the Budget package.

It’s never a bad time for a history refresher and the unrest in Egypt is reviving interest in the Suez Crisis from the early 1950′s. The upshot of those events were that the British empire collapsed and the pound sterling was replaced by the US dollar as the world’s reserve currency.

Things have changed a bit overnight with month-end re-allocations getting the blame. EUR/GBP came in for some heavy selling by a UK clearer and there were also large flows in GBP/CHF and USD/JPY. January proved to be quite a bullish month for pairs like EUR/USD and Cable and the strong monthly close suggests that the trend may continue into February.

US DATA: Jan farm prices +7.0%.

–Lower 1Q Borrowing Estimate On Lower SFP Balance

WASHINGTON (MNI) – The U.S. Treasury estimated it will borrow $237
billion of net marketable debt in the first quarter of 2011, assuming a
$65 billion cash balance on March 31, the Treasury announced Monday
afternoon.

The cash balance includes $65 billion for the Supplementary
Financing Program (SFP).

The borrowing estimate is smaller than the prior estimate of $431
billion borrowing, which assumed a cash balance of $270 billion at the
end of March.

“The decrease in borrowing relates primarily to a lower SFP
balance,” Treasury said.

For the second quarter of 2011, Treasury estimated it would borrow
$299 billion, assuming a $95 billion cash balance on June 30. The cash
balance includes $5 billion for the Supplementary Financing Program.

In the fourth quarter of 2010, Treasury’s actual borrowing was $363
billion, while the end-of-quarter cash balance was $343 billion,
including $200 billion for the SFP.

Previously, the department had announced it would borrow a net $362
billion in the fourth quarter with a $300 billion cash balance on
December 31.

“The higher cash balance resulted primarily from lower outlays”
Treasury said.

Details of the quarterly refunding are scheduled to be released on
Wednesday, February 2 at 9:00 a.m. ET.

** Market News International Washington Bureau: 202-371-2121 **

[TOPICS: MFU$$$,MGU$$$,MP$FI$]

• Gov’t seeks to restore confidence in economy

Looks like they are not going to go quietly…

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