v EUR slips from recent highs as final Greek budget deal is delayed yet again;

v GBP tumbles from its overnight peak ahead of a BoE meeting at which further QE will likely be announced;

v JPY remains lower amidst threats of imminent central bank intervention should the yen appreciate any further.

The USD is marginally higher this morning as falling stocks and commodities provide support for the safe-haven dollar. The rebound against its primary counterpart, the EUR, comes as Greek debt talks stalled yet again and labor unions staged a daylong strike to protest the latest austerity measures. Meanwhile, investors are still digesting consumer credit data released by the Fed yesterday afternoon. Households are increasingly relying on credit to fund recent purchases with total exposure jumping to $19.3B in January versus an expected reading of $7B. After a gain of $20.38B in December, the measure is widening at the fastest pace since August 2000. The gains reflect an increasing degree of confidence in the economy despite continued difficult conditions in the labor market. A report released by the Labor Department showed that there were on average four unemployed Americans vying for each job vacancy, more than twice the number before the financial crisis began four years ago. Despite the mixed reports, the US economy continues to outperform many of its peers, making the USD a relatively attractive asset.

The EUR pared some of its recent gains against the dollar overnight, but remains well entrenched within its higher ranges. The slowed appreciation comes as investors again fear that Greece might miss its self-imposed deadlines of implementing fresh austerity measures. Greek officials yet again delayed voting on a new budget as private sector involvement on Greek debt restructuring remains up in the air. Meanwhile, social pressures are mounting as labor unions took to the streets, seeing the coming spending cuts as an imposition of the interests of their foreign creditors. From their perspective, it's hard to argue otherwise with Greek unemployment at 17.5% and the austerity measures expected to sap another 1.5% from GDP with the economy already contracting at a 5.5% annualized pace. While recent positive economic reports out of the regions core economies are keeping the common currency afloat, the EUR's upside potential remains capped by the ongoing struggles in the periphery economies.

The GBP pared much of its gains from earlier this week against both the USD and EUR ahead of a key BoE announcement expected to restart the flow of liquidity in another round of quantitative easing. The consensus is that the Bank will spend another 50B GBP on asset purchases, taking the total spent on QE to 325B GBP since operations began in March 2009. The MPC is expected to leave interest rates unchanged at 0.5%. While further easing may be seen as contradictory to the rather surprising string of British economic data throughout the first month of 2012, the economy did contract by 0.2% in the fourth quarter. The threat of double-dip recession amidst easing inflationary pressures will likely be enough to spur British policymakers into action.

The JPY remains within its recent narrow range of 0.5% to either side of the key 77 handle against the USD. Increased interventionist rhetoric has weighed on the yen in recent days, but investors may soon test the BoJ's resolve. Finance Minister Jun Azumi again told reporters that Japan is ready to intervene in currency markets if needed. He cited the success of the BoJ's previous bout of yen-selling in late October as a roadmap for future operations and that the currency has yet again become a target for speculation.

The Commodity Currencies are generally lower this morning, but remain elevated within their monthly ranges. Despite equities slipping into the red in early trading, commodities have been rather resilient with oil pushing higher to $98/bbl, copper rising to $390/lb and consumables generally more expensive. The CAD neared a three-month high against the USD in early trading before paring much of its weekly gains on waning market risk appetite. Similarly, the AUD and NZD pulled back from recent multi-month bests against the USD as investors' willingness to assume riskier positions remains tepid at best with no final plan yet reached in Greece. Nevertheless, the Aussie remains relatively well supported, just 2.5% off its all-time best against the USD, after the RBA unexpectedly kept interest rates on hold at 4.25% yesterday, preserving the highest yield in the G10.





































10-Year Treasury Yield:




 $ 1,733.60

 $ (12.80)


 $ 390.25

 $ 1.75

Crude Oil: 

 $ 98.37

 $ 0.09





This market summary is prepared by Union Bank's Global FX Department for the general information of its customers. It is based on the most accurate information currently available, but should not be considered investment advice or a guarantee of future exchange rates or trends.