The dollar continued to trade on the back foot as market sentiment was buoyed by a dovish Fed, successful Italian bond auctions and reports of progress on the PSI talks in Greece. Global equities are trading positively with the DAX currently up about +1.44% while U.S. stock futures are currently higher by about +0.35%. U.S. Treasury yields are under pressure with the 5-yr yields just above record lows made yesterday after the Fed extended its pledge to keep rates low until late 2014. In Europe, Italy sold its maximum target of 5b euros at an auction of zero-coupon and inflation-linked bonds. Italian borrowing costs fell with the 10-yr yield currently lower by about 13bps to 6.10%. Sovereign yields spreads for most of Europe also eased with the exception of Portugal.

Reports that Greece's private creditors are willing to accept a weighted average coupon of 3.75% which is below the 4% previously sought helped to lift sentiment. The news that negotiations are progressing with a deal on the horizon supported the euro as the common currency rose to session highs of around 1.3170/75. IIF head Charles Dallara is expected to propose the lower coupon rate later today in Athens. We would note that a Greek deal is mostly priced into FX markets as the euro has climbed amid the ongoing talks with private creditors. There have been no talks however in the troika on the ECB taking a writedown on its holdings of Greek debt which remains an issue.

Commodities are broadly higher as the dollar extends losses with WTI crude currently up about +1.49% and trading back above the 100 level. The precious metals gold and silver have benefitted as a result of expectations of prolonged Fed accommodation and are respectively higher by +0.43% and +0.90% at time of writing. The strength in commodities and improving risk appetite has seen commodity currencies outperform against the buck today with significant gains in AUD, NZD and CAD. The Loonie touched parity against the USD for the first time since Nov. 1.

There was little economic data released out of Europe with consumer confidence surveys out of Germany, France and Italy. The Feb. German GfK consumer confidence unexpectedly rose to 5.9 from the prior 5.7 (cons. 5.6), France's Jan. consumer confidence increased to 81 from the prior 80 (cons. 80), and Italian consumer confidence remained at a 16-year low with a print of 91.6.

On the data front for the upcoming NY session at 0830ET are Dec. durable goods orders which are expected at 2.0% from the prior 3.8%, the Chicago Fed national activity index for Dec., and weekly initial jobless claims. Due out at 1000ET are Dec. leading indicators and new home sales figures.