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Currency Trading Update

Contestant number 1 still holds 5 of the top 8 portfolios in the currency trading portion of the Million Dollar Portfolio Challenge, but three traders are doing their best to push him down in the rankings. Contestant number 4, who moved up one spot by Friday's close, made nearly $100,000 by catching the latest decline in EUR/USD. Indeed, signs of lingering risk aversion in the markets have benefited the "safe-haven" US dollar, but more so the Japanese yen. Meanwhile, contestant number 5 moved up three spots between Thursday and Friday as he closed out a handful of long EUR/USD positions right around the time the pair topped above 1.3700. Finally, contestant number 6 - who actually fell back two spots on Friday - may prove to make a bit of a comeback by today's close as he has exited four extremely profitable short GBP/JPY positions.

Event risk at the start of this week will be very low, though the start of Tuesday's US trading session could see a rise in volatility:

Asian Trading Session
*No key indicators due to be released.

European Trading Session
*No key indicators due to be released.

US Trading Session
01/13, 08:00 ET
Federal Reserve Chairman Bernanke Speaks on Crisis, Policy Response - Federal Reserve Chairman Ben Bernanke is scheduled to speak in London at 08:00 ET on the financial crisis and policy response, and this could prove to be one of the biggest market-movers of the week due to its potential impact on risk sentiment. If Chairman Bernanke is bearish on prospects for the financial markets and global economy, his comments could have very negative repercussions for the stock markets, and we could subsequently see flight-to-quality spark demand for Treasuries, the US dollar, and Japanese yen. On the other hand, if he announces a new type of policy action or if he manages to inspire confidence that conditions will not get significantly worse, risky assets could rally.

Terri Belkas
Currency Strategist
Forex Capital Markets LLC

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