The U.S. dollar is trading higher this morning against all currencies except for the Yen despite talk of Germany coming to the rescue of Greece. U.S. trade numbers were weaker than expected with the deficit widening from -$36.4 billion to -$40.2 billion. Although exports rose to the highest level since November 2008, higher oil prices caused the value of imports to surge. The expansion of the trade deficit has pushed USD/JPY higher but investors should not undermine the fact that solid demand for U.S. exports is positive for the U.S. economy. Nonetheless from a GDP perspective, the wider deficit could trigger a downward revision to fourth quarter GDP. Meanwhile Canada's trade deficit also widened to the largest level since November 2008. The monthly deficit hit C$246 million, from a revised deficit of C$201 million. Imports and exports both increased but imports rose at a faster pace due to a stronger currency and higher energy prices (even though Canada is a big oil exporter). U.S. demand for autos was very strong with two thirds of the 1.7 percent rise in exports coming from auto demand. Looking ahead, we expect a quiet NY trading session with most U.S. traders preoccupied with the snowstorms in the Northeast. However with the EU Summit looming, a potential bailout of Greece will continue to dominate the headlines. EU nations have waited long enough and it is inevitable that someone will be forced to step up and do for Greece what the U.A.E did for Dubai. Germany appears to be the most willing and a deal is close. Everyone is waiting for "the" announcement because official support for Greece will lead to a rapid improvement in risk appetite which should trigger sharp rally in the euro and all other high yielding currencies.

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