The dollar is off 0.5% against the yen but 3.5% higher against sterling, which sank as low as $1.3337. The dollar has also gained 2.7% against the kiwi, 1.5% against the Australian dollar, 1.1% versus the euro, 1.0% relative to the Canadian dollar and 0.7% against the Swiss franc.

Asian stocks fell for the most part. Japan's Nikkei fell 2.3%, and the Hang Seng lost 2.9%. Share prices fell by 2.5% in India, 1.4% in Singapore, 1.3% in the Philippines, 1.1% in Malaysia, 2.8% in Taiwan, and 2.1% in South Korea. Stocks fell 3.1% in Australia and 1.4% in New Zealand. In contrast, the British Ftse and German Dax have edged 0.3% higher.

While the 10-year JGB yield dipped 2.5 basis points to 1.22%, sovereign bond yields climbed in Europe.

Oil prices fell as low as $32.70/barrel and are down 8.6% on balance. Gold eased 1% to $831.30 per ounce.

The Japanese government's monthly economic assessment was downgraded for a fourth consecutive time to worsening rapidly. The quarterly gauge of consumer sentiment fell 4.5 points to 26.7, lowest since at least 1982. The monthly reading in December was 26.2 compared to 28.4 in November 32.6 last June and 38.0 in December 2007. Toyota global sales fell 4% last year. Japan's Tertiary index of service-sector activity dropped 0.9% in November and by 3.5% from a year earlier.

The Bank of Canada is expected to cut its target interest rate by 50 basis points to 1.0% at 14:00 GMT. Barack Obama officially becomes the 44th president of the United States at 15:00 GMT.

New Zealand consumer prices sent a mixed message. The all-items index dropped more than expected, falling 0.5% last quarter and to 3.4% year-on-year from 5.1% in 3Q08. But inflation for non-traded items rose 0.8% and to 4.3% y/y from 4.1% in 3Q and 3.5% in 4Q07. Another significant rate cut by the Reserve Bank of New Zealand is still expected later this month.

British consumer prices dropped 0.4% in December, only half as much as expected because a big VAT cut failed to be fully passed on to consumers. On-year CPI inflation was 3.1%, lowest since April and down from 4.1% in November and 5.2% in September. Core consumer prices slid 0.3% and to 1.1% y/y from 2.0% in November and 2.2% in September. Consumer price inflation for goods was at a 12-month rate of 1.8%, down from 5.7% in September, but the pace for services was at 4.6%, the same as in September. Given the severity of Britain's recession, risks to inflation in the future remain biased to the downside.

Italian industrial orders plunged 6.3% in November and showed a 12-month decline of 26.2%, most since at least 1992. Industrial sales plunged 3.9% and by 13.9% from November 2007 compared to a 12-month drop in October of 5.9%. These results are substantially weaker than anticipated.

Investor confidence about the future in Germany and Euroland was better in January than expected. The German ZEW expectations index rose for a third straight month to -31.0 from -45.2 in December and -53.5 in November. Its Euroland counterpart was -30.8 after -46.1 in December and -54.0 in November. Current conditions, however, deteriorated, substantially further according to the ZEW measures, dropping to -77.1 from -64.5 for Germany and to -84.7 from -71.2 in December and -58.9 in November for the whole euro area.

The French Prime Minister, Fillon, said the government is prepared to allocate EUR 6 billion of supported for the auto sector.

Canada's monthly survey of manufacturers gets released at 13:30 GMT.