Good morning,

Stock markets in Europe continued on the bid despite a bad Industrial Production for December, which will put a damper on the growth in the Euro zone. Euro Stoxx 50 took home 0.6%, while the EUR fell more or less across the board - EUR/USD is still struggling with trend resistance from Dec 2013 highs and currently it's the fourth day in a row, where this resistance is being tested. The big surprise from yesterday was related to the UK economy, where the GBP leaped higher on the Inflation Report from the MPC, where the main message was in their forward guidance, predicting a medium-term unemployment rate of 6-6.5%. The market traded higher on back of expectations that the BoE will have to increase rates and Cable is pushing towards the 2014 highs at 1.6668 (currently at 1.6636.)

In the US, the 10-year note auction came out lower than prior (2.795% vs. 3.009%), and the Monthly Budget Statement for January also surprised positively coming out at $-10.42bn vs. $-27.5bn expected. However, this was not enough to satisfy market participants who traded the US dollar higher and a equities closed mixed. Nasdaq managed to take home 0.2%, but the Dow and S&P closed lower.

Overnight, indices traded lower with the Nikkei down 1.8% on back of an increase in the Australian Unemployment rate for January coming out at 6.0% vs. 5.8% expected. This lead to a sell-off in risky assets, and which has materialised in a stronger JPY and CHF, while the AUD took quite hit, trading about a figure lower against the US Dollar overnight.

Today, the EU session has come off on a weak not with equities pointing lower on back of the development in Asia. On the macro side, markets will be focusing on the ECB Mothly Report at 09GMT as well as the US January Retail Sales (Core MoM exp at 0.1% vs. 0.7% prior). At 15GMT, Fed's Yellen will once again address the markets, which could have an additional impact should she feed new information on the monetary policy.