Poland’s Finance Minister, Jacek Rostowski, tells Stephen Sackur why his country has yet to join the Eurozone.

Back in December, the ECB held its now famous 3-year LTRO operation, allowing banks to pledge all sorts of liquidity for cheap cash. In the end, banks pledged about 489 billion EUR.

Well there’s another operation coming up at the end of February, and it sounds like it’s going to be ginormous.

FT:

Several of the eurozone’s biggest banks have told the Financial Times that they could well double or triple their request for funds in the ECB’s three-year money auction on February 29.

“Banks are not going to be as shy second time round,” said the head of one eurozone bank at last week’s World Economic Forum in Davos. “We should have done more first time.”

So it sound like it will be easily over  EUR 1 trillion.

Read the full story >

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The market is getting its first chance to react to the big Eurozone downgrades from Friday afternoon, and the general trend is modestly lower.

US futures are down a touch, the Euro fell, but has recovered, a bit, and Australia, the first market open is down notably.

Due to the holiday in the US, Monday is likely to be quiet, but obviously it will be interesting to watch European debt markets full digest the news.

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Quick points here. We probably haven’t seen the end of the Eurozone downgrades.

First, Jamie Coleman at ForexLive notes:

Next week, all the banks and other government-related issuers in the downgraded countries will be downgraded as well.

First the sovereigns, then the banks. They do it every time…

And then Felix Salmon discusses the EFSF rating…

My guess is that the EFSF is going to get downgraded very soon — quite possibly on Monday. There’s actually not much point in Europe restructuring it so that it retains its triple-A: the political cost would be huge, and the benefit would be entirely hypothetical. (In theory, the financial markets are happy to lever up triple-A-rated assets. In practice, if those assets are European sovereign debt, not so much.)

It’s still not clear that any of these ratings matter, but the big red-letter headlines will have an impact.

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The last half of 2011 was dominated by ever more grim news from Europe. But will 2012 be the same?

The eurozone sovereign debt crisis has escalated, but recent moves by the European Central Bank have calmed that angst for now. However, analysts have waxed skeptical that these measures will be enough to keep that optimism going for long, and are unconvinced that EU leaders’ current plans for fiscal consolidation and a firewall against contagion go far enough towards addressing the crisis.

We combed research reports from the street and put together a compendium of predictions from Wall Street’s major financial firms for the year ahead.

See the rest of the story at Business Insider

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TEHRAN, Iran (AP) — Iran says the new record low of the national currency to the U.S. dollar is not linked to the latest sanctions from the United States targeting the country’s central bank.

Foreign Ministry spokesman Ramin Mehmanparast on Tuesday insisted there “is no relation” between the two. He says the American sanctions “have yet to be put into practice.”

The Iranian currency’s exchange rate hovered late Monday around 18,000 riyals to the dollar, marking a roughly 12 percent slide compared to Sunday’s rate of 15,900 riyals to the dollar.

President Barack Obama on Saturday signed into law a bill targeting Iran’s central bank as part of the West’s efforts to pressure Tehran over its nuclear program. It goes into effect in six months.

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More footage has appeared on YouTube showing the terrible extent of violence during the December 16 protests in Kazakhstan (via RFE/RL).

The protests, in the Kazakh oil town of Zhanaozen, are thought to have left at least 10 dead and 75 people injured.

This new video, which appears to show the same square featured in a previous video we put up last week, shows a number of wounded (or possibly dead) protestors — WARNING: it contains distressing images.

RFE/RL reports that the country’s Prosecutor-General’s Office has announced it will be investigating reports that police used excessive force.

WATCH:

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Asian markets are mostly higher, with Shanghai up 1.2% and the Nikkei up 0.6%.

European markets are flat.

Dow futures point to a small drop at the open.

For the year, the S&P 500 is up 5.38 or 0.43%. Even if it finishes in the green, this will have been a throwaway year for stocks.

Gold has recovered to $1562 per ounce after falling to around $1520 yesterday. The euro is also bouncing back against the dollar.

Somehow the Dow remains one of the best performing stock markets of the year.

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The euro just fell more than half a cent in the past hour—a dramatic drop in a generally slow-moving trade.

It has even dropped below that $1.30 mark we’ve been following recently. That price has been an indicator not only for the strength of the currency, but even as a reflection of the stability of the monetary union.

This dip follows a relatively positive Italian bond auction this morning, after action by the European Central Bank last week eased pressure on sovereign borrowing for the Italian and Spanish governments.

We’ll have updates as the story develops.

UPDATE: A look at the British pound sterling against the dollar shows an even more dramatic drop. The pound is down over a full cent on the dollar in just the last hour.

Check it out:

UPDATE II: We’ve heard a few different possible reasons for the steep fall in the price of the euro, though we’re still not convinced that any one of these developments is having this significant an effect on the price of the euro:

• Lukewarm reception of positive Italian bond auctions this morning

• Greek elections may be pushed from February to April, according to Finance Minister Evangelos Venizelos (via @gpolitica)

• Rumors of a French downgrade, still expected from Standard & Poor’s

• Continuing angst about Europe

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Shorting the euro is more popular among hedge funds than ever, according to Societe Generale’s Hedge Fund Watch.

Short positions on the euro, which is trading around $1.30, passed the previous peak in June 2010, when it was trading at $1.19.

Hedge funds also like shorting the pound, buying the yen, shorting natural gas and buying crude oil. Of course you might not want to follow hedge funds after a year of poor returns and steady outflows.

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