Euro Rises After Greece Bailout Passed Parliament, UK in Focus Today

Euro resumes recent rebound against dollar and strengthens against yen after Greece parliament approved the terms of the second international bailout. The EUR 130b rescue loan package contract was cleared with 213 voted for and 79 voted against out of a total 292 present members. Based on current momentum, EUR/USD would have a take on 1.33 level today. But overall outlook in the markets are rather mixed. In particular, risk sentiment is uncleared for the moment as deeper pull back in equities is favored which could provide some support to dollar. Though, in either case, European majors could likely have upper hands against commodity currencies in near term, as talk of China slow down stays. That is, for example, while current development doesn't warrant stronger recovery in EUR/USD, near term rise in EUR/AUD is anticipated.

Taking about Europe, Fed Bernanke said yesterday that the threats from the debt crisis eased recently as developments has lowered the risks. He hailed the exchange of bailout support and deeper budgets by Greece while acknowledged the PSI debt swap deal. Nonetheless, he warned that "a significant expansion of financial backstops" is still needed to safe guard the Eurozone from contagion. And contagion risks remained a concern for U.S. financial firms and money market funds, U.S. financial firms and money market fund and their supervisors and regulators.

Looking ahead, BoE minutes and UK budget are the main focuses today. The minutes will likely review unanimous vote for keep rates unchanged at 0.5% and the asset purchase program unchanged at GBP 325b in March meeting. Chancellor of the Exchequer Osborne will also present his 2012 budget today. It's generally expected that the budget will continue mid term consolidation to restore public finance equilibrium and should be affirmative to UK's AAA rating.

On the data front, New Zealand current account deficit narrowed to NZD -2.76b in Q4. Australia Westpac leading indicator rose 0.6% mom in January. Japan all industry index dropped -1.0% in January. UK public sector net borrowing, Canada leading indicator and US existing home sales will be released.