Top Stories

* Equities drop at start of the week MSCI down -0.5%

* Russia/Ukraine deal back in doubt

* Citibank may book 10 Billion from Morgan deal

* UK Brown to prepare the lending plan

* OIl back below $40/bbl

* Gold just below $850/oz

Overnight Eco

* Japan on holiday

* ANZ Australian Job Ads Plunge 9.7% M/M

Event Risk on Tap

* CAD NHPI maket looks at -0.3%

Price Action

* USD/JPY pull back to 90 as yen crosses continue to sell off

* AUD/USD drops to 6900 as carry comes under fire and job situation worsens

* GBP/USD pulls below 1.5000 in quiet trade

* EUR/USD presured to 1.3300 post payrolls and focus on ECB easing

The euro started off the new week the same way it ended the last one - by sliding against the dollar as focus in the currency shifted towards the ECB. The central banker in Frankfurt are facing escalating pressure to lower rates in light of the severe slowdown in economic activity in the Eurozone. In contrast , Friday's US Non Farm payrolls, though horrid at -525K, were far better than the whisper number of -700K and as a result support for the greenback stiffened as the data refused to confirm the dollar bears worst expectations.

Meanwhile attention will now turn to the ECB interest rate meeting this Thursday. The consensus call is for no change with rates remaining at 2.5%. Indeed Mr. Trichet and company have offered no reason for the market to think otherwise maintaining their staunchly hawkish posture despite deteriorating economic fundamentals in the Eurozone. Nevertheless, the fear amongst many observers is that by delaying the inevitable the ECB may exacerbate the economic slowdown in the region creating a disastrous contraction in demand. ECB' s intransigence on rates has been compared to the failed policy of 1930's NY Fed which raised rates in the midst of the Great Depression causing greater harm to the US economy.

Whether the ECB succumbs to market pressure this Thursday and actually lowers rates by 25 or 50 basis points remains to be seen. However, irrespective this week's decision, the market is beginning to price in 100bp rates of cuts this year and that dynamic could weigh on the EUR/USD in the near term.

From a broader perspectives the pair appears to be channeling in a 1.30-1.40 range as traders attempt to get more visibility on both sides of the Atlantic. With global economy mired in its worst recession in decades the key question that is now being asked in the currency market is who will recover first? For the time being FX traders are betting that rapid monetary and fiscal policy responses out of the US will help the country's economy to turn first.

Finally, the Australian dollar also came under an assault today, with AUD/USD pair slipping below 6900 in early European trade. Today's massive decline in ANZ job advertisements which showed a plunge of 9.7% on a month over month basis suggests that the economy Down Under many be going down. One key concern of the market is Australia remains the most vulnerable G10 economy to a drop in Chinese imports after China overtook Japan as Australia's largest trading partner. A bet on the Aussie is effectively a bet on global recovery which looks an increasingly dubious proposition as the year begins.

Economic Indicators Update