The euro succumbed to month end selling pressures late yesterday and overnight, falling back versus other majors as a result. It fell to lows of $1.3026 versus the dollar as markets also fretted about the lack of a debt deal in Greece as improved sentiment on the back of better than expected data from China had little impact.

There is talk that we could see some resolution to the talks today but there is also speculation that a final deal will not be done until Greece can show further commitment to fiscal reform. There is also some issue over whether the ECB will participate in some way in the deal, given its now large holdings of Greek debt. It is not part of the official private sector investor talks but it holds about $50 billion of Greek debt (about one seventh). Meanwhile, the IMF has called on Greece to accelerate structural reforms but slow down its deficit reduction. This morning sees the release of final eurozone PMI data for January, which are expected to confirm flash estimates.

In the UK markets will be looking to January’s CIPS manufacturing survey for some direction. The index showed an unexpected bounce in December and is forecast to show another modest rise for last month. Sterling is pretty upbeat ahead of the data after hitting two and half month highs versus the dollar yesterday, while also making gains versus the euro. The Irish manufacturing PMI for January, released this morning, showed a reading of 48.3, down from 48.6 in December. This marks the third consecutive month that activity has been below the key 50 level. Consumer confidence at least has improved, with the latest KBC/ESRI sentiment index at 56.6 from 49.2 in December. However, while consumers are a little more upbeat the index remains far below its long term average.