It was a pretty lackluster London session in terms of price action for most of the majors. One of the bigger moves came in Cable on the back of deteriorating UK economic data. The trade deficit widened to a much steeper than expected -£4.5 billion in November from -£3.9 billion the prior month. This had GBP/USD on the ropes for most of the session and the pair ended about -85 pips lower near the 1.4580/90 zone.

EUR/USD was unchanged overall in London and sitting near the 1.3280 area just ahead of the NY session. The sharp declines in overseas equity marts, meanwhile, meant little for the yen crosses as USD/JPY was steady at 89.20/30 while EUR/JPY held near the 118.50/60 zone.

The market now looks poised for more risk aversion on dovish comments from Fed Chairman Bernanke who said that the proposed massive US fiscal stimulus alone will not spur a lasting rebound. We expect a rebound in bonds and commensurate decline in equities to keep the yen crosses heavy in NY trading.

Upcoming Economic Data Releases (NY Session) previous forecast

* 1/13 13:30 GMT CA Int'l Merchandise Trade NOV 3.8B 3.3B

* 1/13 13:30 GMT US Trade Balance NOV -$57.2B -$51.0B

* 1/13 15:00 GMT US IBD/TIPP Economic Optimism JAN 45 - -

* 1/13 19:00 GMT US Monthly Budget Statement DEC $48.3B -$50.0B

* 1/13 21:45 GMT NZ Building Permits MoM NOV -21.90% - -

* 1/13 22:00 GMT US ABC Consumer Confidence 11-Jan -49 - -

* 1/13 22:00 GMT US Fed's Lacker Speaks on Economic Outlook