Forex Update - USD

The USD traded slightly softer against the EUR in a 1.2817-1.2846 range overnight. Following comments from ECB President Trichet, the EUR jumped against the USD and the JPY, with EURJPY trading in a 151.05-151.46 range. Japanese stocks traded lower overnight despite easing crude oil prices (January futures stay at 58.36$ a barrel). ECB President Trichet and his Group of 10 colleagues, meeting in Sydney over the weekend, signalled confidence in the global economic outlook, which according to Trichet "remains very, very dynamic".

Other than that, the references to action on exchange rate flexibility in the G20 communique were very indirect, and limited to merely describing the benefits of flexibility rather than urging immediate action. Carry trades don't appear to have been discussed explicitly at the meetings, although there was calls for further normalization in monetary policy to cope with inflation pressures. The BIS sponsored forum of G10 central bankers also has met on the sidelines of the G20 and group spokesman Jean Claude Trichet will hold his usual post-meeting press conference later today.

The ECB also holds a "high level seminar" with the EMEAP group of central bankers from the Asia-Pacific region, which includes the BOJ, PBoC, RBA, and RBNZ, concluding with a joint Trichet/Bollard press conference on Tuesday. It's a light week for US data ahead of US Thanksgiving on Thursday.

Treasury Secretary Paulson speaks on capital market regulation later today at 2000 GMT on "Competitiveness of the US Capital Markets".