The lack of any pertinent economic data did not stop the FX space from witnessing some pretty decent price action. NY trading saw a good amount of jawboning that tossed the pairs around a touch. For the most part, the talk was negative for Euro. The big blow was commentary from the European Union's commissioner-designate for economic and monetary affairs, Olli Rehn, who noted that the credit problems facing Greece have the potential to spill over into other areas of the Eurozone. He also offered a somber assessment of the single currency, stating that he sees a ''serious challenge'' to the Euro's future.

Fed's Hoenig followed this up with some hawkish comments, saying that the FOMC should look into dropping the ''extended period'' language when communicating on the rate outlook going forward. For all this, however, EUR/USD only managed to dip towards a 1.4515 close after a session high just above 1.4555 area. The overall squeeze up in the pair since the Sunday open looks suspect to us and we would think that a better US retail sales number this Thursday could send EUR/USD reeling back into the 1.4300 realm.

Canadian data was mixed with housing starts beating expectations by printing 174.5K in December (consensus = 160.3K) while the older November building permits numbers showed a -4.6% monthly decline on the heels of a 20.0% jump the prior month. The data, coupled with what was a massive overnight move lower, gave the USD/CAD bears some pause and the pair promptly edged up towards 1.0340 in NY trading after an open by 1.0270. We remain constructive on the Canadian dollar in the longer-term and would continue to be better sellers of USD/CAD rallies (especially into the 1.05/1.07 zone).