Please be advised that recommendations provided below are cursory and may include sections from our comprehensive reports provided to clients. Recommendation offered below are not always up to date and real time advice is available to current clients.

This recommendation last updated on February 1, 2009.

Over the short term, we are positive on the US dollar against the Euro and British Pound resultant of relative strength of the US over the Europeans. Over the long term we remain concerned by the ever growing debt, US consumer contraction, and low interest rates.

We initiated a buy position on the US dollar against the Euro and British Pound earlier this year from the $1.60 and $2.00 levels for the Euro and Pound, respectively. As of November 26, 2008 (1 Euro = $1.29 & 1BP = $1.53) we were neutral on the currencies for the remainder of the year. Risk averse entities were advised to avoid these two currencies for the reminder of 2008, while clients seeking higher returns (i.e. risk) may enjoy a technical short term rally in the Euro and BP with upside potential of $1.35 and $1.65 for the Euro and BP, respectively. The Euro managed to end 2008 at $1.40 after reaching a high of $1.47 in the middle of December. We initiated a short recommendation on the Euro as of the beginning of the year with a short term target of $1.28. As of now (February 1, 2009) we recommend buying the Euro with a target of $1.315 prior to the ECB meeting on February 5. If the ECB’s lowers its interest rate below the current 2.00%, we foresee $1.23.

We continue to believe that the Euro zone and Great Britain will lag the United States in any potential economic recovery and will contribute to the long term strength of the US dollar.

Clients: Please refer to currency specific research notes offering detailed insight.

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