Friday 30 January 2009 www.blackswantrading.

com

Key News
 Japanese industrial production fell a larger-than-expected 9.6 per cent and unemployment
rose sharply to 4.4 per cent in December, highlighting the rapid deterioration in
economic activity in the face of fading global demand. (FT)
 Eurozone inflation has tumbled to its lowest for almost 10 years as a result of sharp falls in oil
prices and the rapid contraction in economic output. (FT)
 US gross domestic product contracted at a 3.8 percent annual pace from October through
December, the most since 1982, the Commerce Department said today in Washington.

Key Reports Due (WSJ):

8:30 a.m. 4Q Advance GDP: Previous: -0.5%.
8:30 a.m. 4Q Employment Cost Index: Previous: +0.7%.
9:45 a.m. Jan Chicago PMI: Previous: 34.1.
10:00 a.m. End-Jan Reuters/U Mich Sentiment Index: Previous: 60.1.

Quotable
"Time's glory is to calm contending kings,
To unmask falsehood and bring truth to light."

William Shakespeare

FX Trading – ChartView: Commodity road to 2001?

Just maybe the market is catching on to the potential problems facing the commodity
currencies—China. The Reserve Bank of New Zealand made it very clear by its
statement and recent 150 basis point cut that this crisis is intensifying. RBNZ Governor
Ballard said at a recent conference: “The global recession is also now affecting us
through trade channels and a slump in world commodity prices." Kiwi surged to a fresh
new 5-year low against the US dollar yesterday, and continues to get whacked this
morning.

Black Swan Capital’s Currency Currents is strictly an informational publication and does not provide individual, customized
investment advice. The money you allocate to futures or forex should be strictly the money you can afford to risk. Detailed
disclaimer can be found at http://www.blackswantrading.com/disclaimer.html
And Kiwi’s neighboring comdol—the Aussie—is following in hot pursuit for the market
seems to now be pricing in the potential for 100+ rate cut at the next meeting on
February 6th:

Black Swan Capital’s Currency Currents is strictly an informational publication and does not provide individual, customized
investment advice. The money you allocate to futures or forex should be strictly the money you can afford to risk. Detailed
disclaimer can be found at http://www.blackswantrading.com/disclaimer.html
…as we continue to suspect all roads lead to 2001 in the world of commodities….

Commodities Index Weekly:

…and commodities are a big driver of the Emerging Stock Markets; a place where we are
expecting yet another significant leg downward as liquidity continues to drain out
despite the efforts of many governments. And interestingly the euro seems to be
tracking quite nicely with the Emerging Stock Market Index as you can see next page…

Black Swan Capital’s Currency Currents is strictly an informational publication and does not provide individual, customized
investment advice. The money you allocate to futures or forex should be strictly the money you can afford to risk. Detailed
disclaimer can be found at http://www.blackswantrading.com/disclaimer.html
These charts are only charts—history. All may be soon reversed for reasons we don’t
presently foresee as plausible. Our primary view is for risk aversion to be sustained and
likely intensify again on emerging market defaults.

If that story proves correct, the US dollar index can continue to fly a lot farther and
faster:

Black Swan Capital’s Currency Currents is strictly an informational publication and does not provide individual, customized
investment advice. The money you allocate to futures or forex should be strictly the money you can afford to risk. Detailed
disclaimer can be found at http://www.blackswantrading.com/disclaimer.html
…but of course we can’t forget what’s happening to gold. We said before if gold soars
our dollar call is likely all wet. Maybe that statement is all wet, as the dollar is sharply
higher today AGAIN along with gold. Hmmmm…..

Maybe this new correlation has something to do with the bonds. There is rising fear
about bonds as the US government treats them like toilet paper:

Black Swan Capital’s Currency Currents is strictly an informational publication and does not provide individual, customized
investment advice. The money you allocate to futures or forex should be strictly the money you can afford to risk. Detailed
disclaimer can be found at http://www.blackswantrading.com/disclaimer.html
However, short-term paper prices still holding up okay, which might suggest traders
aren’t running out of the dollar despite their bond concerns at the moment.

A three dimensional puzzle it continues to be. Unfortunately we can only draw our
charts in two of them.

Have a great weekend.

Jack Crooks
Black Swan Capital LLC

Black Swan Capital’s Currency Currents is strictly an informational publication and does not provide individual, customized
investment advice. The money you allocate to futures or forex should be strictly the money you can afford to risk. Detailed
disclaimer can be found at http://www.blackswantrading.com/disclaimer.html