The price action was relatively calm in London trading as markets continue to look forward to the ECB rate meeting and US nonfarm payrolls into the latter part of the week. European equities were flat pretty much across the board and the FX space was rather calm. EUR/USD managed to eke out a modest 10 pip rally and was sitting near 1.2870/80 just ahead of the NY session. This was despite another poor batch of economic data across the pond.

German retail sales declined -0.2% in December while the market was looking for an improvement to +0.5% from -0.1% the prior month. Meanwhile, eurozone producer prices fell -1.3% and this was also steeper than expected and took the annual run-rate to just 1.8% from 3.3% previously. Thus the ECB will remain hard-pressed to argue that inflation remains a problem near-term.

The yen crosses were likewise little changed as risk trades remained without direction. USD/JPY slipped a modest -18 pips towards 89.50/60 while EUR/JPY was just -15 points lower into the 115.20/30 zone. USD/CAD managed a 30 pip rally to 1.2450/60 as oil prices came off a touch towards $40.20/bbl. The $40 level for crude looks pivotal here and we briefly tried below it yesterday. We would expect a good break to the downside would see USD/CAD approach 1.2500/10 with relative ease.

Upcoming Economic Data Releases (NY Session) prev est

* 2/3 15:00 GMT US Pending Home Sales MoM DEC -4.00% 0.00%

* 2/3 22:00 GMT US ABC Consumer Confidence 1-Feb -54 - -

* 2/3 US Total Vehicle Sales JAN 10.3M 10.2M

* 2/3 US Domestic Vehicle Sales JAN 7.8M 7.7M