All eyes on the ECB following the break of the key 1.3244 level, EURUSD is trading in a tight range ahead of the ECB meeting. Greek officials pieced together the draft accord of the austerity measures required by the Troika, but whether or not it has broad political support among coalition parties is unclear. The Greek parliament has to approve the new austerity measures which are likely to be submitted and voted upon in parliament before the end of this week. Meanwhile, euro-area finance ministers will finally meet tomorrow to endorse the second Greek rescue package. Greece aside, today, the market will focus on the ECB meeting. The case for another rate cut is strong as credit conditions tightened further and many economies within the Eurozone entered recession. However, it seems that there is some reluctance among some members of the ECB governing council to ease monetary conditions further. Our economists do not rule out the chance of a cut today, but the odds are in favour of a wait-and-see stance with a cut more likely to be delivered at the March meeting when the new staff forecasts are published. The ECB meeting will help investors determine whether or not they should continue to cover their short-positions with an indication of aggressive policy easing going forward while lack of a confirmation of the ECB bond-swap arrangement could cause investors to hold onto their short EUR positions and prevent further EUR upside. Thus, the Q&A will be crucial as the ECB has yet to comment on its participation in Greece's debt restructuring.  Also, we will learn whether or not the European central banks will extend the pool of eligible collateral for the 29 February 3-yr LTRO. The potential for broadening eligible collateral argues for strong demand for the LTRO.

China CPI kicks of the barrage of China's monthly data early this morning, China will release its CPI numbers. Inflation should abate with consensus looking for 4% in January vs. 4.1% in December. A weaker number should support domestic sentiment dragging the Shanghai Index higher and signal policymakers' readiness to further ease monetary policy. Our economist is looking for an additional 250bp of cuts of the RRR in 2012. This should prove positive for commodity currencies.

Bank of England to announce GBP 50bn in asset purchases While UK PMIs exceeded expectations in January; we continue to expect the BoE to announce yet another round of asset purchases today. The last BoE Minutes indicated that the MPC is likely to vote to expand QE when it meets on 9 February which coincides with the end of the GBP75bn QE programme launched in October. However, the case for an extra GBP 50 or 75bn is finely balanced, but we prefer to err on the side of more rather than less at this point in the recovery of the UK economy. Nevertheless, we expect GBP to remain relatively unscathed for two reasons: first, the market is already expecting it and second, GBP benefits from the recent European stress as private investors increase their holdings of gilts. As the situation in Greece stabilises, GBP support from safe haven inflows may fade. But, GBP strength should resume against EUR due to relative monetary policy as ECB easing is expected to be much more aggressive.US Initial Jobless Claims on the US calendar US initial jobless claims today should follow the below 400k trend for the fourth straight week While jobs numbers have been “good”, Fed officials including Williams and Bernanke continue to highlight that the numbers are not robust.

USD-INR FEB 2012 MCX-SX FUTURE:- Yesterday it opened at 49.3175 & made the low at 49.1250. It had then risen to 49.4650 to mark as high of the day & finally closed at 49.3875.For the day we see initial support at 49.10-49.20, resistance at 49.45-49.50 & this is likely to be trading range of the day. Breach of the support at 49.10 may lead to retest of 48.90-48.95. Cross above 49.50 will lead to head towards 49.70-49.75.  Swing trader should go long on cross above  49.50 with the stop of 49.45  for the target of  49.75 & higher. Kindly reduce the quantum of lot as stop loss used are wide due to volatility. Remember traders discretion & judgment of price behaviour during the entry of trade  is vital for profitability of trade  & this can be done at that moment of time only.

EURO-INR JAN 2012 MCX-SX FUTURE :-  Yesterday it opened at 65.20 & went down to mark the low at 65.1550.  It had then risen to 65.6125 to mark as high of the day & finally closed at 65.5325. For the day we see initial support at 65.20-65.30 & resistance at 65.50-65.60.Breach of 65.20 will lead to retest of 64.90-65.00.Cross above 65.60 will lead to 65.95-66.05.   In our view aggressive swing trader should go long on cross above 65.60 with the stop of 65.50 for the target of 65.95 & higher. Once the trade runs in profit trail the stop suitably for exit so that profit is compounded & any higher target can also be taken advantage of it.

GBPINR JAN 2012 MCX FUTURE :- For the day we see  initial support at 78.00-78.10 & resistance at 78.50-78.60.Cross above 78.60will lead to79.10  In our view traders should go long on cross above 78.60 with the stop of 78.50  for the target of  79.10.                   

JPYINR JAN 2012 MCX FUTURE :-   For the day we see  support at 63.70-63.80 & resistance at 64.40-64.50.Breach of 63.70 will  lead to retest of 63.20-63.30.  In our view traders should go SHORT  around 64.30  with the stop of 64.50  for the target  of  63.80  & lower.

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