Euro boost may be short-lived

There was a switch in sentiment overnight as the prospect of a US Budget deal appeared to be on the cards. Discussions between US President Barack Obama and Congressional leaders have been "constructive", suggesting some sign of a potential deal before the deadline. The switch was supported by positive housing news from the US as home builders' confidence and existing home sales which both beat their forecasted figures.

Over to Europe and news that France's credit ratings was cut by Moody's dampened the mood, before a meeting by Eurozone officials to resolve the fate of Greece's €31.5 billion loan tranche. The French downgrade may weigh on markets this morning but expectations of progress towards a resolution to the fiscal cliff will keep markets lifted. News from the Eurozone will do little to help the euro, given anticipated weak PMI and a further drop in the German IFO business confidence survey this week. Finally we may see some encouraging news on the Greek front if the country's loan tranche is permitted today (20 November). However, any boost to euro sentiment will be short lived as negotiations about Greece's sustainability and differences among its creditors dominate the limelight.

Elsewhere this week, the results of the EU finance meeting for Greece will dominate sentiment alongside keenly anticipated German growth figures to end the week on Friday.

Overnight and all eyes remained on the Bank of Japan meeting to see if it delivers on its promise to bring more easing over coming months. There were no shocks from the BoJ, but the yen remains on the back foot in the wake of calls for "unlimited easing" by the opposition LDP party. However, the outcome of elections is by no means clear-cut and although the LDP will likely garner the lion's share of the vote its policies may be constrained by coalition partners.

Back to the UK to round things off, and tomorrow will be dominated by Bank of England minutes. We will see the MPC's latest round of voting on further easing and possible interest rate rise. This will come alongside UK Public Finance figures, which will tell us the amount of money financed to the UK government.