Wednesday 14/12/2011 3.00 PM GMT 4.00 PM CET

This daily round up is earlier than usual today, there will be one later around 10 pm GMT but we are doing an earlier one today, as we had some position changes.

We have been out and out dollar bulls for months and we see no reason to change this strategy just yet – its made us a lot of profits and we expect more to come. While we see a rally in risk currencies ( as there now very oversold) the rally will be short, sharp and brief.

Euro zone is failing to get to grips with its short term problem of restoring confidence but even if they do it now ( which we doubt) the zone is finished in its present form. There is to much debt, austerity is choking off growth, interest rates are falling and we see a decade of recession coming in many areas of the zone.

I also today in a news wire that, investors apparently were disappointed that the Fed didn't hint of another round of printing money or do a QE3 but this was unlikely to happen at this stage with the inflation backdrop and the fact QE1 and 2 did nothing but inflate asset prices and make banks and brokers money...

Let's do quick round up of positions and then look at the news.

Position Summary

After banking out great profits last week in our long dollar positions, were re opening them this week and below are the levels to watch for entry...

AUD/USD: We have been trading short since 1.080 and we have made some great profits and went flat on the dip to 1.20 and have re sold on the breakout below 1.000 and if we close below this level today, it cements the down trend. We are sticking with our view that the Aussie dollar will trade down to the 80.00 level in 2012 and see it as a trend with fantastic long term downside potential.

GBP/USD: We have been trading the short side of the Pound since 1.61. After taking profit last week just above 1.56, we sold the break of this level and were looking for more downside. Look to sell any rally back to 1.56

CAD/USD: We have been sellers of the CAD since its pop up to 1.010 and its had a nice decline and we banked profits into 98.00 last week and were back in on the break of 97.00.

EUR/USD:We were short from the pop up to 1.42 and we have been trading the short side all the way down and made some really nice profits and we expect more to come and after briefly banking partial profits as we came into test 1.30, we have now sold the break of this level. Rallies back to

USD/JYP: For us the dollar is bullish and prices have moved up today and a move above 78.00 will see the up trend accelerate. 77.50 is now good solid support in our view buy dips or a breakout.

Euro Zone – Merkel Sends the Euro Down

German chancellor Merkel just doesn't get it – her plan to restore confidence in the future doesn't help to restore confidence now, only the ECB can do that but the lady is not for turning. She won't hear of using it but she might have to the way things are going, with Italy in danger of going to the wall.

Italy paid a Euro era record 6.47 percent on its new five-year bonds, compared with the previous record of 6.3 percent set in November. This level is unsustainable and there is no where near enough money in the Rescue fund to bail it out – the ECB must be used to restore confidence otherwise we have the very real possibility of Italy going to the wall.

Maybe Euro zone leaders will see sense soon but you have to wonder why they were so smug after their summit, when it was obvious to anyone that they had not solved the issue of confidence in investors and the Euro will remain under attack until they do.

Economic data on euro zone industrial production in October shows the region's economy is headed towards a contraction in the fourth quarter and worse should be in store in the New Year. Output was down 0.1 percent in October after plunging 2.0 percent month-on-month in September.

Comment

The Euro looks like its now heading for 1.20 and our 1.30 target set at when we first went short at 1.42 has now been taken out. Continue to look to sell into rallies as the outlook for Euro zone worsens – a great bear trend!

India Gloom Deepens – India, China and Brazil ALL Slowing Up

India's economic gloom deepened on Wednesday as figures showed a record low rupee is adding to the central bank's inflation problems and an adviser to the prime minister said there was little that could be done to stop the currency falling further.

An 18 percent fall in the the rupee since July is adding to a worry of an economic crisis in the country as high inflation prevents the central bank from easing to kick start growth. We saw a big slide in factory output recently as well to add to the gloom. Problem for India ( as it was for Brazil) recently has been the fact the yield curve had become inverted which points to recession. When everyone said India and Brazil would continue to do well, the yiled curve told us otherwise, the only nations with worse curves are Ireland, Greece and Portugal and we know the mess there in.

I read again today that China will be able to kick start growth but this is a joke – it has no one to sell to! Its biggest export markets the US and Euro zone are both contracting and there is simply not enough internal demand to pick up the slack. Chinese growth will fall dramatically over the coming year and so to will India's and Brazil's.

Global Economy Sliding into Recession

Euro zone remains in a mess the UK, Japanese and American economies all remain sluggish and the nations of the East and the powerhouse Brazilian economy which have provided most of the economic growth and optimism about global growth are now all hitting the buffers and we see no reason for the global economy getting better, before it gets a lot worse.

With the bearish backdrop to the global economy, we see the dollar as bullish and after taking profits last week, were back long the dollar and expect more profits to come.

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