The US Dollar traded sideways for much of the European trading session as forex markets digested the implications of the Federal Reserve FOMC statement and the data from Germany and Euro-zone yesterday. Currency traders were happy to keep the Euro above the 1.1980 support level against the US Dollar, trading out for the day at 1.2025. The Swiss Franc ended the day at around the 1.3100 level after trading most of the day in a fairly narrow 55 pip range between 1.3070 and 1.3125. The Japanese Yen closed the day at the 117.75 level after flirting up to 118.20 as fx traders had a look to see if there was any interest at that level. I would expect at least another look at that level to test the resistance at 118.30 looking for 119.30.

The story of the day was the British Pound which suffered after the set back of worse than expected current account data. Currency traders sold Cable from 1.7430 down 65 pips to 1.7365 on the release of the figures, then following through to record a low of the day at 1.7315. Sterling traded out for the day at 1.7345. Acording to the figures released by the Office for National Statistics, Britain's trade deficit soared to an all-time high of £31.9bn in 2005, equivalent to 2.6% of output. GDP grew by 0.6% in the fourth quarter over the third quarter, a figure in-line with market forecasts and 1.8% higher than for the same quarter in 2004. The Canadian Dollar traded in a narrow trading range of 40 pips between 1.1745 and 1.1705. It ended the European trading session at 1.1715 and is continuing around that level in North Americ