Fund Performance per day (inception date: 4 Dec 06) : 1.97762%

Friday

EUR - Traders focused on US non farm payroll after the ECB rate hike and comments from Trichet. Trichet was generally upbeat about European growth, which was also reflected during the ECB December staff projection meetings. However despite a string of hawkish economic data during the European hours, traders looked to the non farm payroll to decide their net positions on the dollar cross.

Today

JPY (Neutral) - (From Saxobank) A story in the Japanese Jiji News stated that the BoJ would keep rates unchanged. This resulted in yet another round of JPY selling across the board, supported by a streak of weak Japanese macro economic data recently. Both CPI figures, GDP figures and other, monthly releases are still painting a picture of an economy struggling to overcome the deflation and stagnation since 1990. The hope (for Carry Traders, at least) seems to be that JPY will forever stay a weak and struggling funding currency vs. the high yielders.

USD (Gaining strength) - US Treasurer, Paulson, was out in China on Friday, calling for more "foreign exchange rate flexibility", which theoretically equals a lower USD/CNY exchange rate. The market reacted by sending the USD higher, not lower. This tells us that there was a critical mass looking for a trigger to buy USD. In other words, EURUSD is no longer a one-way street as it was after the break of 1.2980.

OIL (Turning Bearish) - Two years ago Saudi Arabia, the world's biggest oil exporter, opened its spigots and let supply out-pace demand. The result was a gradual build up inoil inventories in the US, Europe and several Asian oil-consuming countries. This month Ali Naimi, the country's influential oil minister, appeared abruptly to reverse that accommodating policy. At a meeting in Cairo he told reporters that the market was "significantly" oversupplied. "Inventories in the US are high, not low . . . That's why the market is out of balance," the minister said, adding that 100m barrels of oil should be cut to rebalance it. Inventories have indeed swelled in recent years. By the end of September, stockpiles in the world's 30 biggest oil-consuming countries were at eight-year highs, holding enough oil to last 55 days of consumption. This worries Mr Naimi because, as the spare-oil cushion in consuming countries has grown, some of the power to influence world oil prices has shifted from the Organisation of the Petroleum Exporting Countries to its customers. Saudi Arabia has already begun to regain its clout and rebuild its own cushion of spare supply, which dwindled as the kingdom tapped into it over the past years to quench a growing thirst in the US and China. Saudi Aramco, Saudi Arabia's national oil company, is on schedule to boost its production capacity from 10.5m to 12.5m barrels a day by 2009, while the energy ministry is keeping tight control of exactly how much of this it chooses to pump each day. The rest remains underground, for use in the event of a sudden supply interruption elsewhere in the world. In fact, signs of a shift in Riyadh's policy began to emerge in October. It was Saudi Arabia's idea that Opec agree to reduce its production by 1.2m b/d at the cartel's October meeting in Doha. On Thursday the 11-member group is scheduled to meet again, this time in Abuja, the Nigerian capital. Mr Naimi's utterance and the immediate echo of agreement from other ministers in Cairo is the best indication yet that the kingdom and Opec are seriously considering another cut to further trim the inventories outside their control.

Later

1730h - GBP : CPI

1800h - EUR : German ZEW Survey

2130h - USD : Trade Balance

0315h - USD : FOMC Rate Decision

Technicals

Look for a retracement towards the 1.3030-area for the EUR/USD