EU Officials Versus European Finance Ministers - The Euro fell broadly in overnight trading as a deal for an immediate increase in the euro zone's bailout fund, known as the European Financial Stability Facility (EFSF), faded after German Finance Minister Wolfgang Schaeuble was quoted ruling out bolstering the size of the fund. Uncertainty about whether Germany and France would support an increase in the effective lending capacity of the bailout fund will be the focus at today's meeting of euro zone finance ministers. Germany is instead pushing for broader anti-crisis measures to be agreed at a summit of European Union leaders in March. Last week we heard various European officials, such as European Union Economic and Monetary Commissioner Olli Rehn and European Commission President Jose Barroso on the need to increase the fund. Why the mixed signal? Let me be frank here, EU officials are not publicly elected so all they want to do is ensure that their gravy train continues while the various finance ministers have to answer to their public and the public in Germany and France are in no mood to bail out others. Also weighing on the Euro were comments by ECB policymaker Athanasios Orphanides which played down euro zone rate hike expectations, which rose last week after the ECB hinted it was ready to act to curb inflation if necessary. Elsewhere, the GBP hit a eight-week high against the USD on rising speculation that UK inflation pressures could prompt the Bank of England to raise interest rates as early as June. In Asia, the Yen was up against the USD but well within its recent trading range while the AUD continued to flounder due to the ongoing flooding. In Canada, the CAD was higher on Monday despite lower oil prices and reduced liquidity due to the U.S. public holiday. The main focus will be tomorrow's Bank of Canada announcement on interest rates. No rate rise is expected but the accompanying statement will be scrutinized for clues as to when the bank will resume hiking rates.
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