USD/CAD is showing little movement in the Monday session. Currently, the pair is trading at the 1.31 line. Investors will be starting the week looking for economic cues, as there are no Canadian or US releases on the schedule. On Tuesday, The US releases PPI and Janet Yellen will testify before Congress.

US crude stockpiles continue to record surpluses. On Wednesday, Crude Oil Inventories made a splash, soaring 13.8 million barrels, according to the Energy Information Administration (EIA). The indicator has recorded five straight surpluses, easily exceeding forecasts on each occasion. The huge gain also marked the highest surplus since late October. Crude posted sharp losses on Tuesday, following the release of the API inventories report, which predicted a surplus of 14.2 million, compared to a forecast of 2.38 million. The EIA says that US production in 2017 will be the highest since 1970, so cuts from OPEC and Russia may not lead to higher oil prices, due to the steady increase in US crude production. The Canadian dollar is sensitive to crude fluctuations, so stronger oil prices would likely boost the Canadian dollar.

Donald Trump continues to entangle himself in controversy, with US allies, the media and the Supreme Court. On Thursday, Trump said that the administration was working on a "phenomenal" tax plan, which would be released in a few weeks, although he gave no details. Trump's plan is expected to lower taxes for both corporations and individuals, although tax reform promises to be a slow and daunting task, as changes to the US tax code can only be made by Congress. Still, the markets are hungry for any movement in this direction, and the dollar could get a strong boost once Trump outlines his tax agenda.

EUR/USD is almost unchanged on Monday, as the pair trades at 1.0630. It's a very quiet day on the release front. German inflation improved, as WPI came in at 0.8%, above the forecast of 0.3%. There are no US events on the schedule. On Tuesday, Germany releases GDP and consumer confidence numbers, while the Eurozone also releases GDP. The US will release PPI and Janet Yellen will testify before Congress.

The eurozone economy continues to improve. Growth has been steady and inflation, which has languished at low levels for years, is higher. However, there are black clouds on the horizon. There is increasing uneasiness in the markets as populist, far-right parties are gaining support in France, the Netherlands and Germany, threatening the old order. First up is France – the country goes to the polls in April, and Marie Le Pen, the far-right candidate in the ring, is leading in the polls ahead of the first round of voting. Le Pen wants to take France out of the Eurozone and has promised a referendum on France's membership out of the European Union. Although Le Pen is not expected to win the presidency, neither was Donald Trump. Le Pen has enthusiastically endorsed Trump's anti-establishment message and if she does well in the polls, the euro could be headed to lower levels.

Across the Channel, British Prime Minister Theresa May is preparing to invoke Article 50 and commence negotiations with the EU over Brtain's departure by the end of March. May has said that a deal could be reached in two years, but on Thursday, the head of the European Commission in Britain, Jacqueline Minor, countered that the timeline was unrealistic, suggesting that an "implementational" phase would be needed. The European Union doesn't want to encourage other members to exit, so it has no reason to go out of its way to accommodate Britain, and Minor has warned that the Brexit negotiations could get "nasty".

Donald Trump continues to entangle himself in controversy, with US allies, the media and the Supreme Court. On Thursday, Trump said that the administration was working on a "phenomenal" tax plan, which would be released in a few weeks, although he gave no details. Trump's plan is expected to lower taxes for both corporations and individuals, although tax reform promises to be a slow and daunting task, as changes to the US tax code can only be made by Congress. Still, the markets are hungry for any movement in this direction, and the dollar could get a strong boost once Trump outlines his tax agenda.

Daily Pivots: (S1) 112.72; (P) 113.28; (R1) 113.73; More...

Intraday bias in USD/JPY remains on the upside for the moment. Correction from 118.65 should have completed at 111.58, on bullish convergence condition in 4 hour MACD. Further rally would be seen to 115.36 resistance. Break will confirm this bullish case and target 118.65 high next. In that case, the larger rally from 98.97 could be resuming. On the downside, below 112.85 minor support will dampen this bullish view and could extend the correction from 118.65. In that case, downside should be contained by 38.2% retracement of 98.97 to 118.65 at 111.13 and bring rebound.

In the bigger picture, price actions from 125.85 high are seen as a corrective pattern. The impulsive structure of the rise from 98.97 suggests that the correction is completed and larger up trend is resuming. Decisive break of 125.85 will confirm and target 61.8% projection of 75.56 to 125.85 from 98.97 at 130.04 and then 135.20 long term resistance. Rejection from 125.85 and below will extend the consolidation with another falling leg before up trend resumption.

Subscribe to our daily and mid-day newsletter to get this report delivered to your mail box

Daily Pivots: (S1) 0.9997; (P) 1.0029; (R1) 1.0054; More.....

Intraday bias in USD/CHF remains on the upside for the moment. As noted before, a short term bottom is formed at 0.9860 on bullish convergence condition in 4 hour MACD. Sustained trading above 55 day EMA (now at 1.0038) will pave the way for a test on 1.0342 high. On the downside, below 0.9935 minor support will turn focus back to 0.9860 instead.

In the bigger picture, prior rejection from 1.0327 resistance argues that USD/CHF is staying in a medium term sideway pattern. In any case, decisive break of 1.0342 resistance is needed to confirm underlying strength. Otherwise, we'll stay neutral in the pair first. In case of another fall, we'd expect strong support from 0.9443/9548 support zone. Meanwhile firm break of 1.0342 will target 38.2% retracement of 1.8305 to 0.7065 at 1.1359.

Subscribe to our daily and mid-day newsletter to get this report delivered to your mail box

Daily Pivots: (S1) 1.0608; (P) 1.0638 (R1) 1.0668; More.....

EUR/USD recovers mildly after dipping to 1.0670. But intraday bias stays on the downside with 1.0713 minor resistance intact. Corrective rise from 1.0339 should have completed at 1.0838 already. Deeper decline should now be seen to retest 1.0339 low. Decisive break there will confirm resumption of medium term down trend. On the upside, however, above 1.0713 minor resistance will delay the bearish case and turn bias neutral first.

In the bigger picture, whole down trend from 1.6039 (2008 high) is in progress. Such down trend is expected to extend to 61.8% projection of 1.3993 to 1.0461 from 1.1298 at 0.9115. On the upside, break of 1.1298 resistance is needed to confirm medium term bottoming. Otherwise, outlook will stay bearish in case of rebound.

Subscribe to our daily and mid-day newsletter to get this report delivered to your mail box

Daily Pivots: (S1) 1.2442; (P) 1.2481; (R1) 1.2523; More...

Intraday bias in GBP/USD remains neutral for the moment. Overall outlook remains unchanged. Price actions from 1.1946 are viewed as a consolidation pattern, with rise from 1.1986 as the third leg. In case of another rise, we'd expect upside to be limited by 1.2774 to bring larger down trend resumption. On the downside, below 1.2346 will revive the case that such consolidation is completed at 1.2705 already. In that case, intraday bias will turn back to the downside for retesting 1.1946 low.

In the bigger picture, fall from 1.7190 is seen as part of the down trend from 2.1161. There is no sign of medium term bottoming yet. Sustained trading below 61.8% projection of 2.1161 to 1.3503 from 1.7190 at 1.2457 will target 100% projection at 0.9532. Overall, break of 1.3444 resistance is needed to confirm medium term bottoming. Otherwise, outlook will remain bearish.

Subscribe to our daily and mid-day newsletter to get this report delivered to your mail box

Euro recovered broadly today as EU raised both growth and inflation forecast. Meanwhile, the Japanese Yen stays the weakest one on solid risk appetite. EU raised growth forecast for both EU and Eurozone in its Winter forecast released today. For EU growth is projected to be 1.8% in 2017 and 2018, up from November estimate of 1.6% and 1.8%. For Eurozone, growth is projected to be 1.6% in 2017 and 1.8% in 2018, up from November estimate of 1.5% and 1.7%. Inflation is also expected to pick up. For EU, inflation is projected to rise for 0.3% in 2016 to 1.8% in 2017 drop back to 1.7% in 2018. For Eurozone, inflation is expected to rise from 0.2% in 2016 to 1.7% in 2017 and drop back to 1.4% in 2018.

For UK, EU expected growth to "moderate in 2017 and weaken further in 2018. UK growth is expected to drop to 3.1% in 2017 to 1.2% in 2018. EU commissioner for economic and financial affairs, taxation and customs Pierre Moscovici said that "the European economy has proven resilient to the numerous shocks it has experienced over the past year." However, he emphasized that "with uncertainty at such high levels, it's more important than ever that we use all policy tools to support growth."

French FM Sapin Hit Back at Navarro

French finance minister Michel Sapin hit back at US president Donal Trump's advised Peter Navarro's criticism on Germany. Navarro said Germany exploited the low exchange rate of Euro. Sapin plainly said that "these attacks clearly make no sense for a number of reasons". Firstly, Euro moved freely and ECB is independent to Eurozone's member countries. And, "the ECB never tries to manipulate the exchange rate of the euro to achieve trade or competitive policy goals." Meanwhile, "the euro is the currency of the entire euro zone. On the international level what counts is the surplus of the entire Eurozone, not that of Germany."

European Yields Surged on Political Risks

Treasury yields rose solidly last week in France, Italy and Spain as political risks intensified in Europe. Rating agencies including S&P and Moody's have warned of sovereign default should far right French presidential candidate Marine Le Pen's plan to redenominate the country's 1.7 trillion euro public debt into francs materialise. According to Moritz Kraemer, S&P's head of sovereign ratings, "there is no ambiguity here [about the default]… If an issuer does not adhere to the contractual obligations to its creditors, including payment in the currency stipulated, [we] would declare a default". Moreover, Alastair Wilson, head of sovereign ratings at Moody's, also suggested that any country leaving the euro would be in default if changing the currency of its debt caused investors to lose out financially relative to the original promise. He added that the consideration is whether "investors will be able to get back the value they put in, when they expected to get it back".

Fed Chair Yellen to Highlight the Week

On the data front, Japan Q4 GDP rose 0.2% qoq, below expectation of 0.3% qoq. GDP deflator dropped -0.1% yoy, above expectation of -0.2% yoy. German WPI rose 0.8% mom in January versus expectation of 0.3% mom.

Looking ahead, Fed chair Janet Yellen's semiannual testimony to Congress is the main focus of the week. Yellen will testify before the Senate on Tuesday and the House on Wednesday. Markets would look for signals on any change on Fed's forecasts of three rate hike this year. Some might also want to get hints on chance of March high. However, based on uncertainties over the fiscal policies Trump would adopt, it's likely that Yellen would sound non-committal. As of Friday, fed fund futures are pricing in 13.3% chance of March hike, and 67.3% chance of hike by June.

Here are some highlights for the week ahead:

• Tuesday: Australia NAB business confidence; China CPI, PPI; German GDP, CPI final, ZEW; Italy GDP; Eurozone ZEW, industrial production; Swiss CPI, PPI; UK CPI, PPI; US PPI
• Wednesday: UK employment; Eurozone trade balance; US CPI, retail sales, Empire state manufacturing, industrial production, business inventories, NAHB housing index
• Thursday: Australia employment; ECB monetary policy accounts; US housing starts and building permits, jobless claims, Philly Fed survey
• Friday: New Zealand retail sales; Eurozone current account; UK retail sales; Canada foreign securities purchases; US leading indicator

EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.0608; (P) 1.0638 (R1) 1.0668; More.....

EUR/USD recovers mildly after dipping to 1.0670. But intraday bias stays on the downside with 1.0713 minor resistance intact. Corrective rise from 1.0339 should have completed at 1.0838 already. Deeper decline should now be seen to retest 1.0339 low. Decisive break there will confirm resumption of medium term down trend. On the upside, however, above 1.0713 minor resistance will delay the bearish case and turn bias neutral first.

In the bigger picture, whole down trend from 1.6039 (2008 high) is in progress. Such down trend is expected to extend to 61.8% projection of 1.3993 to 1.0461 from 1.1298 at 0.9115. On the upside, break of 1.1298 resistance is needed to confirm medium term bottoming. Otherwise, outlook will stay bearish in case of rebound.

Economic Indicators Update

Subscribe to our daily and mid-day newsletter to get this report delivered to your mail box

The prospects of U.S President Donald Trump unleashing a "phenomenal" tax plan in the coming weeks have boosted risk sentiment consequently elevating global stocks. Asian shares cemented gains during early trading on Monday with the renewed Trump-on trading mood propelling European markets into the green territory. Wall Street may be poised to trade higher if the bullish momentum from Asia and Europe coupled with the "Trump effect" encourages investors to seek riskier assets. Although there is a possibility of stocks following a positive trajectory this week from the rekindled risk appetite, the threat of Trump's "phenomenal" tax plan falling short of market expectations may limit upside gains.

Dollar revived by Trump

The Greenback staged a sharp rebound last week after U.S President Donald Trump promised a "phenomenal" tax plan which was seen as supportive of US economic growth. It is becoming increasingly clear that the Dollar's value has been dictated by Trump this quarter with optimism over fiscal stimulus, infrastructure spending and tax cuts fuelling the bull rally. Expectations of higher US interest rates in the future have also played a part in supporting the Greenback with prices likely to remain buoyed in the medium to longer term. While prices may be supported in the longer term, there is a risk of bears attacking the Dollar in the short term if the pending tax announcement in the coming weeks leaves participants empty handed. From a technical standpoint, the Dollar Index remains slightly pressured on the daily charts with weakness below 100.50 encouraging a further decline lower back towards 100.00.

Yen remains a friend in times of uncertainty

The Japanese Yen found itself exposed to downside risks against the Dollar on Monday after the combination of soft domestic data from Japan and the risk-on trading environment enticed bears to install repeated rounds of selling. Japans economy grew by 0.2% in the final quarter of 2016 which continues to highlight how soft consumer spending, tepid inflation and external headwinds have impacted the third largest economy in the world. With uncertainty still a dominant theme in the longer term, the appetite for the Yen may heighten consequently punishing Japanese exporters further. The USDJPY continues to fulfil the prerequisites of a bearish trend on the daily charts as there have been consistently lower lows and lower highs. Weakness below 113.50 created from risk aversion could trigger a further selloff lower towards 112.50.

Currency spotlight - EURUSD

The slew of elections in Europe combined with the rising threat of Eurosceptic parties disrupting the unity of the Eurozone has exposed the Euro to heavy losses. Sentiment remains bearish towards the EURUSD and recent reports of Greece's debt crisis returning with full forces has encouraged bearish investors to attack the currency repeatedly. The horrible combination of heightened political risks, uncertainty and a resurgent Dollar in the longer term could send the EURUSD lower towards 1.0500. Technical traders may observe how the EURUSD reacts to the 1.0650 resistance with weakness acting as a signal for sellers to send prices lower towards 1.0500.

Commodity spotlight - WTI Crude

WTI Crude remains entangled in a fierce tug of war as optimism over OPEC cutting oil production coupled with fears of U.S shale pumping oil incessantly keeps investors on edge. While last week's unexpected draw in U.S gasoline inventories bolstered oil as optimism rose over demand remaining healthy in the world's largest oil market, fears of U.S shale impacting the OPEC agreement capped oil prices below $54. Oil markets may be injected with extreme levels of volatility this quarter if fears resurface over the oversupply in the global markets making a return. Technical traders may observe how WTI crude reacts to the $54 resistance level with weakness potentially opening a path lower towards $52.

Monday February 13: Five things the markets are talking about

Stateside, the markets attention this week turns to Fed Chair Yellen semi-annual testimony in Congress (Feb 14th and 15th 10:00 EST). Investors will be looking for more clues on how probable are the expectations of a March rate hike.

Note: The last FOMC decision has dented those probabilities (+21%) due the uncertainty with the fiscal side of the U.S economy. On the weekend, Fed vice chair Fischer stated that there is "significant uncertainty about what Congress and the Administration will do with fiscal policy."

Elsewhere, there are no central bank meetings this week, but the ECB's minutes from January's meeting will be released on Thursday. Expect investors to study the text for policy clues going forward.

Internationally, the Eurozone, Germany, Italy and Japan will report GDP data, while price data, both consumer and producer, again will give the market a better understanding on global "inflation."

After Canada's 'phenomenal' jobs report on Friday, other commonwealth countries get their opportunity this week - U.K and Australia.

1. Equities get the green light

The "Trump trade" is on the rise again, supporting global stocks and bond yields as investors bet that the U.S. president's tax reform plans will boost economic growth and corporate profits.

Following on from Friday's record high closes on Wall Street, Asian equities overnight have rallied to an 18-month, while Euro stocks rise for the fifth consecutive session this morning - their longest winning stretch for two months.

In Japan, the Nikkei share average rallied to a two-week high overnight, supported by a weaker yen (¥114.00) and relief that talks between U.S and Japan yielded no negative surprises. The Nikkei gained +0.4%, while the broader Topix gained +0.5%.

In Hong Kong, shares closed at a four-month high, supported by the materials sector following a rally in commodities prices and capital flows from the mainland. The Hang Seng index rose +0.6%.

In China, the main stock indexes rose for their fourth straight day of gains to a fresh two-month high, as the materials sector underpinned the market. The blue-chip CSI300 index rose +0.7%, while the Shanghai Composite Index gained +0.6%.

In Europe, the Stoxx 600 has added +0.2%, heading for a fifth straight gain for the longest winning streak of the year, mostly supported by financials. While mining stocks have dragged the FTSE 100 higher at the open, with metals prices behind the sector's gains.

U.S stocks are set to open in the black (+0.1%).

Indices: Stoxx50 +0.4% at 3285, FTSE flat at 7259, DAX +0.5% at 11731, CAC-40 +0.6% at 4857, IBEX-35 +0.3% at 9405, FTSE MIB +0.5% at 18947, SMI flat at 8454, S&P 500 Futures +0.1%

2. Oil falls on rise in U.S. drilling

Crude oil prices start the week on the back foot in response to growing evidence that U.S. production is rising and as some investors unwound positions ahead of OPEC's first report on compliance with its deal to cut production.

Brent crude futures are down -45c at +$56.25 a barrel, while West Texas Intermediate (WTI) crude slipped -41s to +$53.45 a barrel.

The Crude 'bull' feels a tad more comfortable liquidating ahead of the release of the monthly OPEC report (due out shortly). Also providing pressure, another increase in U.S. rig counts.

Note: U.S. oil drillers have added the most drilling rigs since 2012 over the past month, bringing the total count to 591 rigs, the most since October 2015 (Baker Hughes weekly report).

This rise in U.S. activity comes just as some oil producers are reducing output to reverse global oversupply in a bid to prop up prices.

Gold sees red (-0.31% to +$1,230.22) as the dollar strengths on the back of a smooth meeting between Trump and PM Abe that saw no mention of currency policy.

3. Sovereign yields back up, a tad

U.S Treasuries have extended losses after Friday's January import prices came in higher than expectations.

Note: Prices were already slightly lower before the report, holding their momentum from when President Trump halted a three-day rally by suggesting he would unveil a tax overhaul plan within the next three weeks.

Fed Chair Yellen testifies before Congress this week with the opportunity to reset currently low expectations about the possibility of a March interest-rate increase.

U.S 10-year Treasury notes have backed up +1bps to +2.42%.

In Germany 10-year bond yields have increased +2bps to +0.33%, while French yields have increased +5bps to +1.03%.

Note: The fear of "Frexit" - France's far-right candidate Marine Le Pen presented her program for such an exit yesterday - should continue to widen periphery/bund spreads.

Down-under, Aussie 10-year bonds have declined, pushing yields up +1bps to +2.71%.

4. Dollar finds some mojo, but not much

With the market focus again shifting to President Trump's plan to overhaul business taxes and not criticizing Japan's currency policy saw the USD print a two-week high outright against yen overnight (¥114.16) before retreating towards the ¥113.70 ahead of the U.S open.

The EUR again has held its key support at the €1.06 and remains confined to a tight trading range, trading atop of the €1.0645 area. Dealers have been noting that technical momentum would likely to rise on the break of €1.0600 area on a sustained basis.

Sterling is holding ahead of the £1.2525 level with some key data out of the U.K this week (CPI on Tuesday, Jobless claims on Wednesday). The market remains cautious that future data could start to show bigger signs of weakness ahead of the March trigger of Article 50 for the Brexit process. Pound bears are looking to sell on dollar weakness.

5. E.U raises growth forecasts, amid risks from Brexit and Trump

Earlier this morning, the EU raised their economic growth forecasts for 2017 - they are predicting growth across the bloc even as it faces mounting political risks and uncertainties.

The European Commission said the bloc had shown its "economic resilience to shocks last year, when the U.K. voted to leave the union."

In the latest of its projections (published three times a year), the commission said growth in the 28-country EU was expected to be +1.8% in 2017, up from +1.6% forecasted in November.

EU officials also increased their 2016 growth expectation to +1.9% from +1.8% while keeping their estimate for 2018 steady at +1.8%.

Note: This morning's report come with the usual disclaimer - global uncertainties - Trump's stance on key policy areas and the U.K's plan to trigger Brexit talks next month - means that "downside risks have increased" to the bloc's forecasts.

China PBoC resumes issuing Reverse Repos after 6-day halt

Overnight:

Asia:

Japan Preliminary Q4 GDP data missed expectations (Q/Q: 0.2% v 0.3%e; Y/Y: 1.0% v 1.1%e) but still registered its 4th straight quarterly growth and confirmed domestic economy remains on track

Japan-US leader summit did not see the Trump administration raise trade issues with Japan or criticize the weak yen

North Korea fired a ballistic missile off its east coast on Sunday morning;First such test since President Trump took office; UN Security Council meeting possible Feb 14th in response

China PBoC resumes issuing Reverse Repos after 6-day halt

Europe:

Swiss voters rejected govt-approved corporate tax overhaul plan by 59% to 41% margin. Results were binding, meaning parliament must come up with a new tax reform plan

France Econ Min Sapin reiterated calls for Germany to increase investment spending. Brushed aside US criticism that Germany exploited an "undervalued" euro to fuel its exports

UK Jan consumer spending (adj for inflation) hit a 5-month low (Y/Y: 0.4% v 2.5% prior)

EU's Juncker: Greece's third aid program is "on a shaky ground in the sense that we don't see how the IMF could manage this problem"

Spain PM Rajoy re-elected as the leader of the ruling conservative Popular Party (PP) for the 4th term

Americas:

(US) White House advisor Stephen Miller: Administration considering different options after immigration ban decision in the appeals court, including drafting a new executive order

Energy:

Russia Energy Min Novak: To decide in April or May whether to extend oil cut agreement past June 30th. Will meet with Saudi energy minister to discuss the situation in March at conference in Houston

Economic data

(DE) Germany Jan Wholesale sales M/M: 0.8% v 1.2% prior; Y/Y: 4.0% v 2.8% prior

(SE) Sweden Jan PES Unemployment Rate: 4.1% v 4.1% prior

Fixed Income Issuance:

None seen

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

Indices [Stoxx50 +0.4% at 3285, FTSE flat at 7259 , DAX +0.5% at 11731, CAC-40 +0.6% at 4857, IBEX-35 +0.3% at 9405, FTSE MIB +0.5% at 18947, SMI flat at 8454, S&P 500 Futures +0.1%]

Equities

Industrials: [SAAB SAABB.SE -5.4% (Q4 results)]

Financials: [ Lokn Store LOK.UK +2% (Trading update), RBS RBS.UK +1% ( declines media speculation that it was layoff 15,000 positions)]

Technology: [EGSolutions EGS.UK +19% (Trading update and Master services agreement signed), Rexel RXL.FR +1% (Earnings)]

Healthcare: [Stada Arzneimittel SAZ.DE +14% {Cinven makes €3.6B approach), Ipsen IPN.FR +1% (Acquisition of portfolio from Sanofi)]

Speakers

ECB's Villeroy (France) reiterated Council view that Euro is a solid currency

France Fin Min Sapin: ECB does not target exchange rate to achieve trade or competitive policy advantages

Spain PM Rajoy: Not going to trigger early elections and would negotiate budget with Socialists and Basques

EU Commission said to have asked Italy to approve plans to cut 2017 budget deficit by €3.4B by Feb 22nd to avoid risk of an infraction procedure

Portugal Debt Agency (IGCP) chief Casalinho: Portuguese 10-year yields at about 4.2% are historically normal

Kuwait Oil Min Al-Marzouk noted that OPEC compliance from Nov agreement on production cuts at 92%

Currencies

IN FX the focus was shifting to US President Trump's plan to overhaul business taxes after he refrained from criticizing Japan's currency policy during Prime Minister Abe's two-day visit

The USD/JPY pair hit a 2-week higher after Japan-US leader summit did not see the Trump administration raise trade issues with Japan or criticize the weak yen. The pair tested 114.16 in Asia before retreating towards the 113.70 area.

The EUR/USD held its key support at the 1.06 level (50-day mvg avg) for the time being and little changed in its overall price action at 1.0645 area. Dealers have been noting that technical momentum would likely to rise on the break of 1.0600 area on a sustained basis

The GBP/USD was holding ahead of the 1.25 level with some key data out of the UK this week (CPI on Tuesday, Jobless claims on Wed). Dealers remained caution that data could start to show bigger signs of weakness ahead of the March trigger of Article 50 for the Brexit process.

Fixed Income:

Bund futures trade at 163.75 down 16 ticks continuing to fade from highs made last week as Equities continue their ascent. A move back higher continues to target 164.13 followed by 164.46, 164.94 followed by 165.29. Support remains at 163.44 followed by 162.92.

Gilt futures trade at 125.47 down 13 ticks following the fall Bunds in relatively quite trade with futures trading at 3 day lows. Resistance remains at 126.28 followed by 126.70. A continued move down targets 124.91 followed by 124.46. Short Sterling futures trade flat to down 1 bp with Jun17Jun18 remaining at 18/19bp

Monday's liquidity report showed Friday's excess liquidity falls to €1.330T down €4B from €1.334T prior. Use of the marginal lending facility rose to €590M from €337M prior.

Political/In the Papers: - Former Italy PM Renzi to trigger a leadership contest at a meeting of his ruling Democratic Party (PD) which could delay the early election he has been pushing for since he was toppled as PM last year

Frank-Walter Steinmeier is elected as Germany's President

Looking Ahead

(US) President Trump with Canada PM Trudaeu in Washington

05:25 (BR) Brazil Central Bank Weekly Economists Survey

05:30 (DE) Germany to sell €2.0B 6-month BuBills

06:00 (IL) Israel Jan Trade Balance: No est v -$1.6B prior

06:00 (IL) Israel to sell Bonds

06:30 (IS) Iceland to sell Bills

06:30 (TR) Turkey Central Bank TCMC Survey of Expectations

06:45 (US) Daily Libor Fixing

07:00 (IN) India announces details of upcoming bond sale (held on Fridays)

07:00 (IN) India Jan CPI Y/Y: 3.2%e v 3.4% prior

07:05 OPEC Monthly Report

08:00 (PL) Poland Dec Current Account: -€0.7Be v -€0.4B prior; Trade Balance: -€0.3Be v +€0.1B prior

08:00 (PL) Poland Jan CPI M/M: 0.4%e v 0.7% prior; Y/Y: 1.7%e v 1.7%e v 0.8% prior

08:00 (ES) Spain Debt Agency (Tesoro) announces size of upcoming actions in week

08:15 (UK) Baltic Dry Bulk Index

08:50 (FR) France Debt Agency (AFT) to sell €5.6-6.8B in 3-month, 6-month and 12-month Bills

09:30 (EU) ECB announces Covered-Bond Purchases

09:35 (EU) ECB calls for bids in 7-Day Main Refinancing Tender

09:50 (UK) Bank of England Bond Buying Operation (APF Gilt purchase operation between 3-7 years)

11:30 (US) Treasury to sell 3-Month and 6-Month Bills