It was a tale of two cities in the performance of 2 oil benchmarks. The sharp increase in oil supplies in the US continued to weighed on WTI crude oil prices while tensions over Iran boosted Brent crude prices for another day. Gold strengthened further on the Fed's easing prospect and weakness in the US dollar. The market sentiment fluctuated during the day, being lifted by Chinese Premier Wen's comments on European debts but then damped by the cold water poured by Jean-Claude Juncker, Head of the Eurogroup, regarding the EU summit measures and Greek PSI. Wall Street was mixed with DJIA losing -0.09% and S&P 500 gaining +0.11%.

After a meeting with German Chancellor Angela Merkel, Chinese Premier Wen Jiabao stated that China is considering 'increasing its participation in the solution of the European debt crisis through the channels of the EFSF and ESM' as 'it is very urgent and important to resolve' the crisis. However, there's no specified amount on how much the country might invest. Risk appetite was buoyed after China implied it could assist the debt-ridden nations in the Eurozone. Later in the day, Jean-Claude Juncker, Head of the Eurogroup warned that the negotiation regarding the Greek PSI deal has been 'ultra difficult'. It was echoed by the Greek government spokesman Pantelis Kapsis that the talks were proving 'very difficult'. Meanwhile, Juncker also commented that the progress made in the EU summit was 'largely insufficient'.

In the US session, market sentiment once again recovered after better-than-expected US initial jobless claims. Initial claims fell to 367K in the week ended January 28 from 379 a week ago, sending the 4-week moving average down -2K to 376K. Continuing claims fell -130K to 3437K for the week ending January 21. Fed Chairman Ben Bernanke testified before the the House Budget Committee. He reiterated the dovish stance made at the January FOMC meeting. Bernanke acknowledged that 'over the past few months, indicators of spending, production, and job-market activity have shown some signs of improvement' but 'the sluggish expansion has left the economy vulnerable to shocks'. Concerning fiscal policy, he warned that 'there is going to be a massive fiscal contraction in 2013' and 'even as fiscal policymakers address the urgent issue of fiscal sustainability, they should take care not to unnecessarily impede the current economic recovery'.

On the dataflow today, the US employment report for January will be under the spotlight. The market anticipates that the number of non-farm positions will increase +150K during the month, easing from +200K in December. The jobless rate probably stayed unchanged at 8.5%. ISM non-manufacturing index might have climbed modestly to 53.2 in January from 52.6 a month ago.