ECB Defends Portuguese Bonds, AUD Pressured by Floods, UK Buoyed

!! Today's Top Story !!
*1. ECB Back in the Market Buying Portuguese and Irish Bonds* For the
second day in a row, the ECB is stepping in to buy under-pressure
euro-area government bonds from Portugal and Ireland. The news helped
to boost the Euro in mid-European trading. The ECB does not want this
latest round of sovereign-debt jitters to overtake the markets, and
are therefore trying to keep the yield on these bonds lower.
The market now awaits tomorrow's debt auction by Portugal.

*2. Japanese Finance Minister Noda says Japan will Buy Bonds from
EFSF*
Overnight, the Japanese announced that their county is likely to buy
20% of the forthcoming bond offering by the European Financial
Stability. The Euro got a bump from the news, but like the
reassurances from China that it wants to buy Spanish debt, it's not
having a major impact on the Euro. Still, this development in a plus.

*3. Portugal Presents Upbeat Budget Deficit Statement for 2010*
The Portuguese Prime Minister, Jose Socrates said that the country
beat its deficit target by 0.5% of GDP for 2010, cutting back the
deficit below the target for a budget gap of 7.3%. The news was
brushed off by the market which is still concerned that Portugal will
need some kind of loan rescue deal. Socrates said "The country is
doing its job and doing it well. Portugal will not request financial
aid for the simple reason that it's not necessary."

The concern comes as yields on Portuguese 10-year bonds move above 7%.
Greece needed to ask for a rescue within 17 days of its 10-year
breaching 7% on April 6, while Ireland lasted less than a month after
it cracked that level in October.

*4. Floods Intensify, Punish the Aussie*
The AUD/USD was much weaker overnight as we had reports that
Brisbane's financial district had to be evacuated because of the
flooding in Queensland. This natural disaster has been pressuring the
Aussie since the beginning of last week as economists, analysts,
traders and investors worry about the effect of the flooding on the
commodity-driven economy.

*5. Pound Fluctuates, Weaker on Sales Data, Rebounds in Europe*
The Pound was a bit weaker to start the global trading session after
we saw the BRC Retail Sales Monitor show sales down 0.3% in December
compared to a year ago. That compared to a 0.7% y/y gain in November.
But, the Pound managed to recover as it has been supported of late by
rising inflation expectations. That is causing analysts to move up the
expectations for an interest rate increase by the BOE, which has
helped the GBP put in a strong performance.
Source: Fxstreet.com