Major currencies have recovered a bit following the news of a stalemate in the Greek debt talks – but remain slightly lower as the markets head into midday trading.  Behind the support for bullish Euro demand has been a signaling by German officials on the possibility of increasing the capacity of the ESM.  The news is propping up thin support for other major currencies at the moment – as positive economic data is adding very little to market sentiment.  Notably, following the market’s close, speculators will be gearing up for the State of the Union address – set to take place tonight.  Investors around the world will be waiting for proactive plans in dealing with unemployment and housing woes in the world’s largest economy.

1.  Greek debt talks stalled over the weekend as creditors continue to push for a swap coupon of 4% or greater.  The benchmark is being offset set by a 2.5-3% coupon offered by European policymakers.  Both parties are expected to reconvene in the coming days as a European Union summit is scheduled for January 30th.

2.  German officials have signaled a willingness to increase the lending capacity of the European Stability Mechanism – following strong opposition for much of late last year.  The proposed plan could add as much as 250 billion euros to the emergency fund, as officials hope to create a larger backstop.

3.  Canadian retail sales gained for the fourth straight month, rising by 0.3% to C$38.7 billion. The figure is an improvement over the 0.2% expected by market analysts for the month of November.

4.  Manufacturing activity rose in the Richmond region, according to the region’s Federal Reserve Bank survey.  Current activity gained to a survey reading of 12 in the month of January, rising above December’s 3 reading.  Both key subcomponent index results in hiring and new orders helped to prop the figure higher.

5.  Flash manufacturing readings in German improved in the month of January, gaining to a survey reading of 50.9 from last month’s 48.4.  The figure was better than previous estimates of a 49 print, according to Markit Economics.

6.  Bank of Japan policymakers kept interest rates near zero, along with their asset purchase facility currently at 55 trillion yen.  Although economic developments have remained relatively unchanged, concerns over Europe and global recessionary conditions prompted central bankers to lower growth forecasts for the country – to 2% for 2012 from 2.2%.

7.  International Monetary Fund officials have downgraded forecasts for the global economy, supported by recessionary conditions in Europe and a China/India slowdown.  Developed countries are expected to experience a mild expansion – rising by 1.5% through the next two years.