·         Recession will be shown to be over at 09.30

·         0.4% consensus view

·         Obama continues to rile Wall St.

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 This week’s trading started calmly yesterday as investors continued to digest Obama’s plan to limit the size and activity of investment banks.

In currency circles the main story was news of a successful bond auction by Greek authorities. Greece managed to get rid of EUR8bn at a coupon of 6.2% on a 5 year term. There is no real surprise that they managed to sell it all; a 6.2% coupon is very, very generous and signifies an increase in Greece’s future outflows. While this is a good sign for the Greeks and the eurozone as a whole this only but one hoop successfully jumped at the moment. There are many, many more to be completed until investors and ratings agencies alike can relax.

This auction saw euro perform well in the morning session however fears over contagion to other EU member states (Portugal, Spain, Ireland) lingered and saw this strength seep away over the afternoon.

While the Obama administration seems unwavering in its crusade against the banks, announcing that will have draft language ready in the next fortnight, this week provides an ideal forum to gauge the international response. The Davos forum is attended by most, if not all, of the leading financial minds (my invitation obviously was lost in the post) in the world. Should they come down against the plan as I believe most will then we should see risk come back on and the dollar weaken.

Today is a very big day for the pound as we receive the first official estimate of Q4 GDP (09.30), As we put in yesterday’s ‘Sterling Update’ given the poor retail sales figure on Friday we may be slightly disappointed in real terms but I also believe that should we see 0.3% or above we should see sterling progression. We also have German IFO business climate (09.00) this will probably weaken the euro if last week’s ZEW reading is anything to go by and US Consumer Confidence is due at 15.00.

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