USD/JPY rally stops short of Y111.00..........>

FOREX: USD/JPY rally stops short of Y111.00

-USD/JPY added to the week's rally overnight, bidding the pair up to Y110.95 as

momentum flagged on approach into the handle. Yesterday's somewhat positive

reports of progress made between the US and China helped underpin equities, with

markets in China and Japan both closing higher. This has filtered through to

mainland Europe, with regional equities all higher with the exception of Italy's

FTSE-MIB. The USD Index recovering a minority of the Tuesday losses is also

helping somewhat.

-GBP trades off yesterday's highs, retreating slightly after a particularly

strong performance Tuesday. GBP/USD retreated back below the $1.3050 level, but

bulls will have taken confidence from the pair's ability to hold above the

$1.2998 200-dma. Focus in the UK turns to further party splits, with as many as

three Conservative MPs expected to quit in favour of the new Independent Group

in the Commons today.

-Eurozone Consumer Confidence and the FOMC minutes from their January meeting

are the calendar highlights. Fed's Kaplan is also due to speak.