Euro Above $1.31, Italian Auction Upcoming

Holidays in China and Australia made for a very quiet Asia-Pacific session with all the majors within 15 pips of the New York close. AUD is a slight outperformer while USD lags. The European session may also be quiet with German GfK consumer sentiment and an Italian debt sale as highlights.

Markets are consolidating after the wave of dollar selling and gold buying following the FOMC decision. In Asia, the lone indicator was December Japanese corporate service prices, which rose 0.1% compared to the flat reading expected.

Comments from former BOJ deputy Iwata drew headlines. He said the finance ministry should allow the BOJ to create at $643B fund to buy foreign bonds in order to devalue the yen. Iwata is working on a panel on national strategy but Fin Min Azumi has signaled he is reluctant to embrace the plan.

European traders will continue to focus on Greek debt negotiations and developments in other PIIGS nations. Merkel hosts Spanish PM Rajoy in Berlin.

At 0700 GMT, GfK releases German consumer confidence for February. The consensus estimate is for no chance from the 5.6 reading in January. Risks are to the upside with recent sentiment data beating expectations.

At 1000 GMT, Italy hopes to raise up to 5 billion euros in two-year debt. Two-year yields have fallen to 3.65% after opening the year at 5%. The most recent auction posted a 4.85% yield but the market will be expecting something at least 100 bps lower.

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