USD
USD weakened yesterday. EUR/USD rose to 1.3250 and GBP/USD rose to 1.9590 level. Yesterday Greenspan said that the dollar will continue to fall unless the current account deficit narrowed. Traders shorted the dollar after his speech and the market refocused on the central bank reserve diversification which was bearish to the dollar in the long term. Investors should aware of today's trade balance data and FOMC will announce the rate decision. I expected that the Fed will maintain the rate unchanged and the after meeting statement was the critical part for tonight's currency market. According to the CBOT fed fund futures, traders priced in only 26% chance of rate cut next year Q1. If the policy statement restated the inflation risk and the inflation data released on Thursday rise up again, the chance for the rate cut will continue to fall and support the dollar in the short term.

EUR
EUR/USD rose to 1.3250. Yesterday EU did not have any important economic data released and the rally was driven by the speech from Alan Greenspan. Investors should aware of today's German and EU Dec ZEW index which will affect the Euro in the short term. Earlier the ECB revised down the inflation expectation for 2006 and 2007. The interest rate differential between 2yr and 10yr bond yield narrowed which showed that the market expected the Euro short term interest rate continue to rise and the interest rate level can enough to contain the inflation. If the bond yield curve became inverted again, it's bearish to the Euro long term view and might limit the upside for the Euro next year. Technically, EUR/USD support is at 1.3160 and the resistance is at 1.33.

JPY
The Yen weakened yesterday and the USD/JPY rose to 117.24 level. Last Friday the Q3 GDP revised down to 0.2% and the central bank official said that the bank would not raise the interest rate this month. The market confuses about the rate hike schedule for the BoJ and the Yen was pressured heavily across the board. EUR/JPY rose to record high again to 154.95, and GBP/JPY rose to 229 level which was bearish to the Yen. Technically, USD/JPY support is at 116.50 and the resistance is at 117.80.

CAD
The Cad maintained the bearish bias yesterday and USD/CAD rose to 1.15 level. Yesterday released the Oct new home sales price which rose only 0.2%, the smallest growth since 2005 July. The data showed that the Canada housing market might have sign of slow down and if the house price continues to fall, the core CPI would be moderate from time to time. I believe that the Cad interest rate hit the peak already and next year would be likely to cut the rate which I maintain my long term bearish view to the Cad. USD/CAD still trades between the medium term uptrend which the support is at 1.1420, and the resistance is at 1.1550.