The S&P closed with a half percent gain, well off the best levels of the session, but against the present backdrop, a gain is a gain. US home sales rebounded unexpectedly in December as did leading economic indicators, two rare rays of hope in an otherwise gloomy landscape.
The dollar took it on the chin today on the combination of falling risk aversion, signs that the ECB may be limiting dips in EUR/USD and on a big rebound in shares of Barclays which helped spur short-covering in cable. The pound rallied 4.5 cents, stalling just pips shy of 1.4000. EUR/USD reached 1.32, aided in part by comments from ECB officials downplaying the odds of deflation and that rates should be taken below 2% only in exceptional circumstances.
Ifo is due out during the European morning tomorrow. A dip to 81.3 is expected in January from 82.6 in December.