Forex Trader Note: Usd weakness may hit on the strength of risk tolerance in the global market, with 1105 being the main price point to monitor on S&P futures trade. A daily close on either side of that may determine direction for the upcoming global sessions.

Questions on Usd strength will continue until fair value is found off the economic calendar this week, for the next two weeks the calendar is packed with red flag releases. Look for the mixed momentum in the forex pairs to continue, and therefore to be ready to bank near-term targets on most trades taken until the 4 hour trends and momentum reads get aligned.

Same old story in Crude, prices slightly lower on today’s session. We think Crude is a buy and have advised clients to buy March $5 call spreads. In the January contract we feel a move to $76 is possible in the coming weeks. Continued cold weather and a mega energy deal today helped natural gas move 3% higher today. Immediate support is seen at $5.10 and then $4.80 in the January contract with resistance at $5.40 and then $5.50. We will be looking at buying a 40-60 cent dip for clients.

Sugar is higher by an additional 5% today; that marks a 3 day run of over 13%. Ideally you heeded our advice and bought the break-out. We expect a challenge of the September highs about 1 penny higher in the March contract. Big moves in the OJ and coffee markets as well; OJ traded to a 15 month high and coffee appreciated by 2.25%. Soft commodities could be the surprise bullish sector in 2010.

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done.

John Maynard Keynes

It's the trade we've been watching for a while. At the beginning of this month, the dollar looked far too hated for its downtrend to continue. The dying dollar was largely responsible for the commodities boom on an elementary level, and elementary analysis was all we needed to think oil stood a good chance of moving lower.

The strong jobs report on Dec. 4 is what cracked the dollar's descent. Even though the dollar extended that up move only modestly last week, it has so far this month bounced up from 15-month lows. That, in turn, sent oil down some $8 per barrel. Last week was particularly good for those short oil. We hold a half-sized position hedge against an oil price decline, and the hedge surged 13.5% last week.

After 8 days of selling, Crude is now oversold with the daily stochastic at 10 & 15 in the January contract. Clients have been advised to buy March $5 call spreads as we expect a $5 move higher in the coming weeks. Natural gas is too volatile for our liking currently. We will be looking to buy if prices come down 50 plus cents from current levels at the beginning of 2010.

Nice followthrough in sugar as a breakout is confirmed; sugar has appreciated 8.5% in the last 2 sessions to trade to its highest level in 7 weeks. Clients are positioned long March and May, we’ve suggested futures and options. Play the breakout in equities expecting a 5% move in the direction of the breakout.

There was some unusual trade in the Cad yesterday, but it is more involved that the traditional canned explanation. At the Chicago futures market yesterday the open interest increased 17,486 contracts. Since the open interest is now up to 120,704 contracts, this represents a 14.5% increase in the total OI in one day. With such a big increase in the trade, it is very peculiar that the futures market did not have a bigger move. The Cad did gain a little on the dollar yesterday, and technically the market should move in the direction in did on the day the trade was initiated. Perhaps the trade was an adjunct to some activity in the cash market such as price fixing the currency rate on export trades, but the reality is we simply don't know what happened.

Very little action in Crude today with prices closing slightly lower for the seventh consecutive day. As we suggested yesterday, we advised clients to buy March $5 call spreads expecting a trade back to $75 in the next 2/3 weeks. Natural gas exploded today with a surprise draw on the weekly AGA inventory report. On 2 occasions just this week prices moved in excess of 9% in 1 day. If you do not like volatility then look elsewhere. We will not be looking at natural gas until 2010.

The only excitement we see in the softs complex was a breakout in sugar. Prices in March were higher by 5% today and finally closed above the trend line. Clients are positioned long via futures and options. Equities remained sideways; we suggest playing the breakout and currently have no bias. Say it is not so a positive day in metals. Yes indeed gold gained $10 and silver 20 cents. Clients currently own light longs in silver, we would be convinced to start scaling into longs in gold if $1100 was not penetrated in the next few sessions.

Today our net long exposure is perhaps the highest it has ever been in our portfolio. We still find a lot of compelling long investments on the equity side.