Risk aversion let up slightly during the Asian session providing some relief to regional stock markets and allowing risk-correlated FX trades to gain some ground. EURUSD traded between 1.3785-1.3830 while USDJPY traded to 81.65- 82.10, moving on a less negative CPI number release. The oil market has fully priced in Libya's nearly 2 billion barrel/day oil supply as offline - but barring further contagion, we believe that the oil trade has limited upside in the near future. That said, should significant unrest spread to regional neighbors Saudi Arabia and/or Algeria, then prices of course will have major upside. Interestingly, we suspect that Asian countries which have already been hit by massively elevated soft/agro commodity prices are also susceptible to higher oil prices. Should oil prices stay above $100 for an extended period, these countries will see domestic pressure mount regardless of government fuel subsides. This will prove a real challenge for Asian central banks which will need to increase rates yet control FX prices. While we suspect that trades will remains cautious ahead of the weekend, watch for FX traders to being trading on economic fundamentals with the inflation and central bank rate trajectories as core drivers. For the G10 trader, keep a keen eye on the BoE and ECB. The surprisingly hawkish BoE MPC meeting minutes not only provided 1 new rate hike voter (now 3) but the statement highlighted that members' focus on inflation has increased - therefore all eyes will be on the incoming economic data. Today Q4 GDP revision should remains unchanged with downside bias. The incoming data has not supported the stark downturn but has yet to provide inputs that would cause the lagging GDP number to be revised upwards. UK data might come in worse than expected which would undermine the support for a rate hike this Spring. With 25bp hike priced in for June, an unchanged number or slightly lower figure could water down the market's hawkish view. Next week's ECB event will be one to watch to see if the recent moment in the EUR can be sustained. The expectation is that the ECB will further prepare the market for its exit strategy. Forward interest rate expectation have proved that the EUR has support even in this risk-averse marketplace. There is short term EUR risk as the FX market may react with worry to the probable Irish election victory of the Fine Gael party, which has stumped on the revision of EFSF loans to Ireland. In Asia, the NZD got some much need support from the credit agency S&P stating that the government has sufficient flexibility to absorb more fiscal cost from the earthquake. This follows a similar announcement from Moody's, however speculation of an emergency RBNZ meeting sent NZD from .7510 to a .7485 low before bouncing back up again on RBNZ rejecting the market chatter. Despite the mixed economic data spilling out the US, including yesterday confusing durable goods orders - the information is clearly not supportive even though the Fed continues to beat the drum that everything is rosy in the USA. St Louis Fed President Bullard, a non-voter in 2011, was quoted as saying that since the economy had clearly strengthened since QE began the natural debate now is whether to complete the program, or to taper off to a somewhat lower level of asset purchases. We believe that expectations that the Fed is getting closer to tightening is misguided and believe the Fed will say on the sideline until Q4 - the earliest. That said, we are seeing that USD and JPY fueled carry trades looking very attractive and beginning to pay off. Today, market's will be watching UK GDP figure (we expect worse) and events unfolding in the Middle East / Northern Africa. EU peripheral bond yields vs. German have begun to widen again and we are concerned that the early optimism around the global stock markets rebound and sharp increase in volatilities are all indications that perhaps it's slightly premature to head back into risk-correlated trades.