USD/CAD soars in early US session after the release of trade balance data from both countries. US trade deficit unexpectedly narrowed to -40.4b in Nov, much smaller than expectation of -54.4b and hit a five year low. On the other hand, Canadian trade surplus shrank more than expected to 1.28b in Nov. Fall in oil prices is the main reason behind the surprises in the trade data. USD/CAD extends recently rebound to as high as 1.2312 in early US session and is set to take on 1.2345 near term resistance level. Though the rally lost some team as oil rebounds from day low of 36.1 to above 38.

Dollar remains strong in general with dollar index taking out last week's high of 84.01. This indicates that whole rebound from 77.69 has resumed and should now be targeting a retest of 88.46 high. Fed Bernanke warned in a speech today that fiscal stimulus are unlikely to promote a lasting recovery and should be accompanied by strong measures to further stabilize and strengthen the financial system. Bernanke said the more capital injections and guarantees would be needed for stability and normalization of credit markets.

Released earlier, trade deficit in the UK widened to -8.33B pounds in November (consensus: -7.5B pounds; October: -7.63B pounds (revised)), the largest deficit since record began in 1697 as exports outside of EU, especially to the US, declined sharply. DCLG house price plunged by another -5.3% after the revised drop of -7.44% in October. Earlier today, the RICS house price balance eased slightly to -73% in December, compared with market expectation of -74% and November's -76%. In Germany, Wholesale price index dropped -3.0% mom, -3.3% yoy in Dec.

Japan's trade balance came in at a deficit of -93.4B yen in November, compared with consensus of -76.2B yen and a surplus of 145.8B yen in October. Current account surplus in November narrowed for a 9th month to 581.2B yen, -66% from the same period last year. The reading is worse than market expectation of 600B yen and 960.5B in October as export declined by 26.5% while import dropped by 13.7%. Economic watch DI dropped further to 17.6 in Dec.