Fund Performance per day (inception date : 4 Dec 06) : 1.73497%

Yesterday

EUR - (Bullish) Germany's inflation rate will be set sharply higher by a three percentage point rise in VAT next January, but Europe's biggest economy will avoid a collapse in consumer spending, according to a survey on Tuesday. Retailers and service providers appear confident that Germany will escape "a protracted negative impact" resulting from the tax hike. However, private consumption growth could fall by about a percentage point after the increase takes effect on January 1, and inflation will rise by 1.2 percentage points as a result - higher than previously estimated.

USD - (Gaining strength) Bernanke's Hawkish comments last week start to makes sense. Property market activity has taken a big hit, with housebuilders bearing the brunt. They are discounting heavily in an effort to shift the glut of unsold homes. In an attempt to bring supply and demand back into balance, they are also building fewer homes. The economic slump is crimping economic growth and pushing up delinquencies among riskier US mortgages - as HSBC noted yesterday. But the housing downturn looks to be decelerating and a number of leading indicators are showing signs of perking up. Mortgage rates are lower and income growth has been outpacing house price inflation, making housing more affordable. The S&P 500 Homebuilders Index is up about one third, although it remains 30 per cent shy of last year's July peak. Traders will be focusing on the crucial non-farm payroll numbers on friday to decide if the appreciation of the EUR should continue.

JPY - (Turning Bullish) (From UBS) The carry trade environment remains fragile with the market yesterday reacting to comments by BOJ board member Nishimura that the central bank can act even if the market does not match the BOJ's view of the economy. This follows on from fellow board member Mizuno's comments earlier this week arguing that interest rates could be raised even if Japan's economic indicators were not all strong. GDP revisions and machinery orders on Friday and the Tankan next week are key releases now to watch.

Later

1445h - CHF : Unemployment Rate

1500h - EUR : German Wholesale Price Index

2000h - GBP : BoE Rate Decision

2045h - EUR : ECB Rate Decision

Technicals

Go Long on EUR/USD at 1.3595