The Usd was weaker in the Asian session, as concerns over upcoming US economic data took center stage. The EurUsd traded up to 1.3616 from 1.3450, while the UsdJpy dropped sharply in late session, trading from 94.00 to 93.00. The AudJpy, a current barometer for risk appetite, slipped to 67.00 support from 67.80, despite Nikkei being in positive territory and crude prices falling back to $48.53bll. European equity indexes are trading lower and US index futures are point to a weak open. Yesterday's release of the FOMC Dec 16th minutes highlighted that members were steadfast to holding Fed Funds low for an extended period. In addition, the minutes also exposed potential options the Fed may implement if conventional policy doesnʼt have the desired effect. We are expecting the Usd to be on back footing today, as US economic data comes into focus with the release of ADP employment survey ( a precursor to Fridays NFP).

Yesterday's Eurozone CPI estimate came below expectations at 1.6%y/y vs.1.8% exp. Inflation is expect to continue to drop in the first half of 2009. The combination of weak activity data and low inflation, along with recent dovish commentaries by ECB members, makeS us expect a 50bp cut at next week's ECB meeting, on a path to 1%.

In Australia, November's Retail Sales were released this morning and increased by 0.4% m/m, despite expectations of a -0.4% m/m decline. We have attributed the uptick to the RBA's aggressive rate cuts and declining fuel prices, which have supported spending.

German unemployment unexpectedly rose to 7.6% vs. 7.5% exp this morning, which confirms the downturn in wider economic activity has finally hit the resistant labour market.