The Euro has continued its poor start to the year as fears about the state of Portugal’s finances take hold taking the single currency to a 4 month low against the USD and Sterling. Concerns that Portugal will ask for aid from the EU and IMF were fuelled a board member of the Bank of Portugal reportedly saying the country would be able to put the debt crisis behind it more quickly if it received international funding. Tomorrow will be the true test as Portugal will be looking to raise fund for the first time in 2011 and if it struggles they may be forced to turn to the IMF for help. These fears should be taken with a pinch of salt though as we have had similar situations with Spain which amounted to nothing but tomorrow could be a turbulent day for the Euro.
Yesterday we saw the Halifax survey of UK house prices which showed another drop for December. Prices were down 1.3% in December and added to the 0.2% fall in November and points to a still weak housing sector. In comments released with the survey, the Halifax said it did not expect prices to move much in the coming year with risk being on the downside if anything.
Looking forward to the rest of the week and we do not have a great deal to go on, there is a little data out for the US this afternoon but the event that could have the largest effect on the markets will probably be the Portugal’s bond auction tomorrow. Thursday and Friday are quite busy days on the data front but for the moment the Euro will be the centre of attention