Morning Forex Fundamental

EUR

'The situation is getting more problematic for Greece day by day' - Michael Meister, the deputy floor leader and finance spokesman in parliament for Chancellor Angela Merkel's party

Greece struggles to secure a 130 billion euro bailout

Impact High

Greece leaders gathered on Wednesday to agree on a reform deal in return for a 130 billion euro bailout from the European Union and the International Monetary Fund.

'The situation is getting more problematic for Greece day by day,' said Michael Meister, the deputy floor leader and finance spokesman in parliament for Chancellor Angela Merkel's party.

'A day wasted in failing to tackle Greece's administrative, budget and competitive problems is a bad day.' Greeks need to reform 'not for Brussels, Berlin or the IMF, but for their own sake.'

The country may have only several days left to find funds for its bond payment and avert 'outright default,' said Thomas Mayer, chief economist at Deutsche Bank.

'If they don't have the money in the account at the time the payment is due, then they really default,' Mayer said in interview on Wednesday. 'Time is of the essence. I think we have maybe one, maybe two, maybe three more days but that's it.'

USD

'Be 100 percent in equities' - Laurence D. Fink, chief executive officer of BlackRock Inc.

U.S. stocks closed with mild gains on Wednesday

Impact High

U.S. stocks closed positive on Wednesday while investors awaited the outcome of negotiations between Greece and the troika.

The Standard & Poor's 500 added 0.22%, or 2.72 points, to 1,349.96. The Dow Jones Industrial Average gained 0.04%, by 5.75 points, to 12,883.95. The Nasdaq Composite Index soared 0.41%, or 11.78 points, to 2,915.86.

'Be 100 percent in equities,' Laurence D. Fink, chief executive officer of BlackRock Inc., the world's largest money manager, said in an interview on Wednesday.

'I don't have a view that the world is going to fall apart, so you need to take on more risk. You need to overcome all this noise and there are great values in equities.'

GBP

'Further falls in the official rate of inflation, which are expected during the coming months, should be a boost to customers' budgets' - Stephen Robertson, Director General at British Retail Consortium

BRC: U.K. shop price inflation declined in January

Impact: High

U.K. shop price inflation fell to 1.4% in January from 1.7% in December, the British Retail Consortium announced on Wednesday. Food inflation declined to 3.7 per cent from 4.2 per cent in December. Non-flood inflation eased to zero from 0.3 per cent in the last month of 2011.

'Further falls in the official rate of inflation, which are expected during the coming months, should be a boost to customers' budgets and, crucially, should help to improve consumer confidence,' said Stephen Robertson, Director General at British Retail Consortium.

'For there to be any significant improvement in retailers' fortunes in the coming year it's essential that people feel better about their personal finances and become more willing to spend.'

U.K. stocks closed lower on Wednesday. The benchmark FTSE 100 index shed 0.24%, or 14.33 points, to 5,875.93. The FTSE All-Share Index declined 0.24%, or 7.42 points, to 3,034.15

CHF

'Investors are betting Greece will conclude a deal' - Jakup Petur Baerentsen, a chief equity adviser at Nordea Private Bank

Unemployment remains at 3.1%, stocks little changed on Wednesday

Impact: Medium

Swiss unemployment remained unchanged in January, said the Swiss State Secretariat for Economic Affairs on Wednesday. Jobless rate was at 3.1 per cent, the same as in December.

Swiss stocks closed slightly lower on Tuesday. The Swiss blue-chip index SMI, a measure of the largest and most actively traded companies, declined 0.03%, or 1.73 points, to 6,155.86. The broader Swiss Performance Index lost 0.03%, or 1.42 points, to 5,583.65.

'Investors are betting Greece will conclude a deal, that's what's pushing stocks higher,' said Jakup Petur Baerentsen, a chief equity adviser at Nordea Private Bank in Copenhagen. 'Patience will last till the end of this week.'

The Federal Statistical Office is to announce change in month-on-month consumer prices on Friday. Prices declined 0.2 per cent in December and by the same amount in November

JPY

'It is hard to consider that Japan will become a deficit in current account in medium term' - Tatsushi Shikano, a senior economist at Mitsubishi UFJ Morgan Stanley Securities

Japan current account surplus shrank in 2011

Impact Medium

Japan's current account surplus shrank sharply in 2011 to its smallest value in 15 years, as exports weakened, being disrupted by the March earthquake and the Thai floods and energy imports soared after shutdown of nuclear plants.

'It is hard to consider that Japan will become a deficit in current account in medium term,' said Tatsushi Shikano, a senior economist at Mitsubishi UFJ Morgan Stanley Securities in Japan.

'But there is a risk if a yen sharply appreciates and the nation loses global competitiveness, the timing to become deficit country may come sooner than expected.'

The Nikkei 225 rose 1.1%, or 98.07 points, to 9,015.59, while the broader Topix advanced 1.24%, or 9.57, to 782.34

Press Review

Europe

Greek parties struggle to agree a reform deal to secure bailout from international lenders; the ECB agreed to take losses in Greek debt holdings.

25 out of 27 EU member countries have agreed to the fiscal pact for stricter budget discipline January 31. The pact will impose quasi-automatic sanctions on countries that breach EU budget deficit limits.

Greece bailout: Coalition fails to agree cuts

http://www.bbc.co.uk/news/world-europe-16958102

Greek PM Lucas Papademos has failed to secure the support of his coalition for a raft of new austerity measures, after more than seven hours of talks.

RBS boss Stephen Hester speaks out after bonus row

http://www.guardian.co.uk/business/2012/feb/08/rbs-stephen-hester-bonus-row

Banker admits he cannot win 'societal argument' on bonuses – 'none of us are starving' – but insists he is a 'commercial animal' and wants to be paid as such

USA

Ben Bernanke on February 8 reiterated the Federal Reserve's plan to keep borrowing costs near record lows until at least late 2014, despite rapid decline in unemployment.

Iranian oil embargo, triggered by the US, was approved by the EU January 23.

Bernanke 2014 pledge sparks global shift

http://www.marketwatch.com/story/bernanke-2014-pledge-sparks-global-shift-2012-02-09

Earnings are weakening. Greece is mired in dissent. The potential for war in the Middle East is as great as it's been in years. And investors are pouring money back into stocks.

Groupon disclosure, growth concerns hit stock

http://www.reuters.com/article/2012/02/09/us-groupon-idUSTRE81727B20120209

Groupon Inc shares slumped Wednesday as the daily deal company's first quarterly results since it went public stoked concern about limited disclosure and slowing growth

Asia & Pacific

The statistical data released by Chinese officials create mixed sentiment among investors. The FDI has risen to a record-high $116B, despite falling real estate data.

Japan has published first annual trade deficit since 1980 putting into question how long the country can rely on exports to serve a huge public debt.

China Inflation Pickup May Limit Easing Room

http://www.bloomberg.com/news/2012-02-09/china-inflation-unexpectedly-accelerates-to-4-5-on-holiday-spending-food.html

China's inflation unexpectedly accelerated in January on the boost to spending from a week-long holiday, limiting room for monetary easing as Europe's debt crisis damps exports and the property market cools.

JPMorgan replaces Asia fixed income sales head: sources

http://finance.yahoo.com/news/jpmorgan-replaces-asia-fixed-income-070715241.html

JP Morgan has replaced Asia ex-Japan fixed income investor sales head Simon Derrick with Sharad Desai and Sudhir Goel as part of a reorganization of its business in the region, according to sources familiar with the matter.