The British pound gained slightly against the USD

The *US dollar* slid further against most major currencies after
report showed new home-building fell more than expected in December.
The Commerce Department reported housing starts fell 4.3% to an annual
rate of 529,000 units, down from 553,000 in the previous month of
November and the lowest level since October 2009. Meanwhile, building
permits jumped 16.7% to 635,000, surpassing a forecasted 560,000 and
the biggest leap since June 2008. An increase in permits gave way to
optimism for the future in the housing sector but foreclosure filings
and continued high unemployment may further discourage construction in
the near term.

The *euro* hit an 8-week high against the USD as hopes that Eurozone
policymakers would prevent the debt crisis from spreading beyond
Greece and Ireland. Further, investors have been encouraged in the
recent couple days after Russia joined Japan and China in expressing
interest in buying new bonds from the European Financial Stability
Facility (EFSF) rescue fund. Meanwhile, the Economy Ministry raised
Germany's growth forecast for 2011 to 2.3% from a previous estimate
of 1.8%. The ministry forecasted exports to rise 6.5% while imports
would gain 6.4% for this year.

Despite euro's gains, some analysts remain wary that European
officials may not have strong enough measures to prevent the Eurozone
debt crisis from spreading, which may limit further gains past key
levels for the euro.

The *British pound* gained slightly against the USD and fell against
the euro after data showed Britain's labor market grew weaker. The
Office for National Statistics reported unemployment rose at the
highest rate in 8 months in November, suggesting the recovery lost
steam in late 2010. The reports proved even less promising for 2011 as
the government expects to cut 330,000 public sector jobs over the next
four years.

The *Japanese yen* gained further against the USD despite warnings
made by Japanese vice finance minister, Fumihiko Igarashi, who said
Tokyo was ready to act against the currency's rapid movements.
The yen has been gaining steadily against the dollar, surpassing
levels seen before Japanese officials intervened in the currency
market on September 15.

The *Canadian dollar* traded higher against the broadly weaker USD
after a rally in global equity and commodity markets. World stocks hit
their highest level in nearly two and a half years and 4th qtr
corporate earnings boosted confidence in the economic recovery.

Meanwhile, the price of oil, a key Canadian export, rose to near $92 a
barrel and copper hit a record high at $9,781/ton. A weaker US dollar
supports prices for dollar-linked commodities as it becomes cheaper
for holders of other currencies.

The *Australian* and *New Zealand dollars* reached a 2-week high
against the thinly traded USD as commodity prices rose and optimism
about the global recovery heightens. A news release reported a
slowdown in Chinese inflation which reduces the need for aggressive
monetary pricing. A stable growth in the region is a positive sign for
the Aussie and Kiwi as China is a major export market for Australia.
Source: Fxstreet.com