• Hopes of successful Greece deal falling, ECB may be hit – Die Zeit
  • Ifo German business climate index 108.3 in January, better than Reuter’s median forecast of 107.5
  • IMF’s Lagarde: Equilibrium between private and public sector in Greece debt negotiation is a “concerning question.” If haircut on private sector Greek debt is not enough, public holders of debt will have to participate in renegotiation
  • Merkel: We have not yet overcome the euro zone crisis. Have not managed to stabilise situation in Greece
  • Soros: ECB should work with EFSF as lender of last resort
  • Soros: EU governments did “everything wrong”
  • Soros on SNB EUR/CHF cap: Would not speculate against SNB currency cap. SNB can print as many francs as they like to keep the cap
  • EU spokesman Altafaj: EU says Greek PSI deal possible “shortly”
  • Greek government spokesman: IIF’s Dallara to return to Athens on Thursday
  • German bund auction
  • Merkel: Europe’s imbalances have to be corrected
  • Portugal Industry Confederation Chief: Country needs 30 bln euros in additional EU/IMF funds to solve credit crisis
  • UK Q4 GDP -0.2%, +0.8% y/y, marginally weaker than Reuter’s median forecasts -0.1%, +0.8% respectively
  • Bank of England minutes: MPC voted 9-0 to leave rates, QE steady, as expected
  • UK CBI manufacturing order book balance -16, improved from -23 in December and better than Reuter’s median forecast of -20
  • George Soros predicts class war and riots – The Telegraph

Another very volatile morning session. Stop the roundabout, I’m feeling sick and want to get off.

EUR/USD down at 1.2955 from early 1.3025. Inbetween we’ve been up to session high 1.3051 followed by a swallow-dive to session low 1.2948.

We ticked higher initally, Middle East buying as has been their custom lately. BIS then stepped in and sold 1.3040+ and the rally stalled. That’s until the release of better than expected Ifo German data (see above).

We got to 1.3051 on the data but were quickly on the defence as European corporates stepped in and sold. Then as talk of the Die Zeit story circulated (see above) we headed lower, Eastern European selling notable.

We got as low as 1.3000 and then comments from IMF’s Lagarde (see above) sent us through said level with infamous US invesment said to be offloading euros in size. Subsequent comments from Merkel and Soros (see above) heaped further pressure on the single currency.

USD/JPY up at 78.10 from early 77.95 having reached session high 78.24. Decent buying from a US custodial under 78.00 undepinned the rejuvenated pairing.

Cable down at 1.5565 from early 1.5605. The pairing came under some early pressure as longs trimmed possies ahead of the UK Q4 GDP data. We haven’t really seen any net change since the release of the weaker than expected data, selling of the EUR/GBP cross no doubt lending cable some underpinning. The cross is down at .8315 from early .8345.