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The finance minister of Canada, Jim Flaherty will host a pre-budget town hall meeting in Whitby tomorrow at 7:30pm at the Westminster United Church.

Unleaded up 3.334mln vs. 808k build prior Distillates up 1.79mln vs. 694k build prior Refinery use up 2.11% vs. -2.22% prior

Crude expected up 800k vs. up 549k prior Unleaded expected up 1mln vs. up 808k prior Distillates expected up 1.1mln vs. up 694k prior Refinery Usage: flat vs. down 2.22% prior

EUR/USD gains continue today behind President elect Obama's admission the U.S. would likely suffer under a $1trln deficit for a few years.  Yesterday's reversal higher is seeing some follow-thru buying on the heels of a significantly worse than expected ADP employment report and the spectre of Non-Farm Payrolls losse that could easily top 600k.  CABLE is also well bid over the 1.50 handle with a move back over 1.51 possible ahead of the London close.  Losses against the JPY continue as well with a retest of figure 90 likely on even a bad Initial Claims number tomorrow.

Crude rallied into the open, but could not break through resistance at 48.50. Crude is currently down 0.9% at 48.13 with support down at the intraday low of 47.61.

The when-issued 3-year note is trading in the 1.18% area. That's up 6bps versus yesterday and off a low of 0.963% from Monday. The cheapening of the issue should help elicit some demand as dip buyers have been seen in recent action. The notes are also relatively cheap on the curve. The December 3-year note auction was well received with a 2.15 bid cover and a 35.3% indirect bid. It will be interesting to see how much more appetite investors, especially foreign investors, will have for Treasuries as the government will be cramming paper down our throats with some sort of coupon auction almost weekly for the rest of the year, and likely through 2010. Note the Treasury is also selling $35bln in 70-day cash management bills at 11:30 ahead of the 3yr auction at 1:00pm.

Yet another volatile and choppy N.Y. session saw the dollar move broadly higher, though the zigs and zags in between kept adrenalin pumping through most of the session. There was no economic data on tap, but the automaker bailout announcement buoyed stocks through the morning session. and appeared to have helped the greenback overall. EUR/USD shed the remainder of the post FOMC gains, while USD/JPY was supported on the back of the BoJ rate cut, intervention concerns, and an improved risk backdrop. Cable meanwhile, opened around 1.5000, though eased through the day, posting 1.4810 lows into the close. The dollar bloc took a softer tone, on the commodity backdrop, as USD/CAD moved higher through the session after dipping on the back of firmer Canadian CPI data.

The Federal Reserve reserves the right to review and make adjustments to these terms and conditions – including size of program, pricing, loan maturity, and asset and borrower eligibility requirements – consistent with the policy objectives of the TALF

The final revision to Q3 GDP, released next Tuesday, is widely expected to be left unchanged at -0.5%. Analysts expecting some sort of revision to the Q3 data are generally expecting a modest downward adjustment to between -0.6% and -0.8%. Next weeks Q3 GDP report is likely to have a  muted impact on markets given the shift in focus to Q4 GDP - which will more fully encompass the financial market meltdown. Q3 Personal Consumption is expected to be left unrevised at -3.7% and Core PCE is expected to be unrevised at 2.6%.

Dow futures fell 30 points as Obama spoke of the new Labor Secretary.

Gold sold off heavily in premarket trading but found support just below its 9-day moving average of 830.80. Gold would rally after the open to pare its losses, but could trade no higher than 842.50. For the week, Gold gained 2.1%.

Copper hovered around yesterday’s close of 130.15 during premarket trading, but caught a bid as the floor session opened. Copper moved firmly into positive territory but twice bounced off resistance at 134 before paring its gains into the close. For the week, Copper lost 7%.

The Potash Corp. of Saskatchewan issued temporary layoff notices to 940 employees. The company operates 6 potash mines and plans on cutting production by 2mln tonnes (approximately 20%) starting next month. Company's spokesman Bill Johnson says the layoff notices are for the eight-week period beginning Jan. 18. The layoffs are at the company´s three largest mines in Rocanville, Lanigan and Allan.

"We were presented with the proposal and we were asked" if there were any legal issues, but there was minimal negoation, Wagoner said.

EUR/CHF retraced earlier gains to trade back in to 1.5400 ahead of the London close. The cross was unable to benefit from the positive Wall Street open and instead took its guide from movement in the dollar legs. USD/CHF rejected earlier highs of 1.1120 to trade back in to 1.1050, where support was noted, while EUR/USD traded underneath 1.3900 before it steadied around 1.3900. The CHF has gained at the expense of the dollar legs, but there were very limited direct swissy flows, with a number of the crosses today being driven by cross currents in other pairs as liquidity dwindles in to the Xmas holidays.

AUD/USD turned back in to 0.6870 after it found at 0.6800. European names were noted as buyers at the lows, perhaps taking some profits off the table ahead of the London close after it traded from levels above the 0.6900 area in the European morning. Sellers of Aussie have included real money names and proprietary accounts that are looking for further near-term weakness amid weak domestic fundamentals and a bearish technical picture. However, AUD/USD is likely to favor its broad trading range of late unless 0.6500 and 0.7000 gives way in the very near-term, leaving dollar movement/commodity markets to drive short term volatility.

Canadian Governments agreed to support restructuring of non-bank sponsored ABCP. “We expect that this will allow the investors and asset providers to achieve a stable and effective restructuring agreement,' said Fin.Min. Jim Flaherty in a release by the Department Of Finance. “A successful restructuring agreement will protect financial stability and the health of Canada’s financial markets,” added the minister.

Jan Crude, expiring today, is down 0.8% to 35.92

The 30yr is now down 24 ticks at 140-20, and the 10yr is down 17 at 127-14. The 5yr is down 15 at 119-18.

This had been a highly contentious issue during negotiations. Many parties believed such a provision would set a bad precedent and limit opportunities for struggling firms to receive private capital injections. In the future, private sources of funding will be reluctant to assist floundering firms because they know their claims would be junior to government loans if a bailout occurs.

EUR/CHF was boosted by USD/CHF demand, leaving the cross close to its European morning peak of 1.5476. EUR/CHF posted modest gains since early on in the N.Y. session, rallying out of the 1.5385 region. Meanwhile, USD/CHF has traded as high as 1.1120 as dollar buying momentum continues in thin N.Y. trade. Momentum is with the dollar upside and this could see EUR/CHF move back towards the 1.5500 area despite bearish technical studies. Weaker equity markets only had a small impact on the swissy, with price action dominated by dollar movement, which should continue to influence in to the weekend.

AUD/USD recorded session lows of 0.6800, with a broadly firmer dollar tone influencing price action in early N.Y. trade. The pick up in dollar buying momentum also added further pressure on commodities, with gold losses accelerating to $831.10 lows. Yesterday's Aussie slide encouraged further selling pressure today, with technical studies turning bearish after the outside day reversal. Bid interest at 0.6800 and in to 0.6780 area are currently supporting, but further dollar buying could see a quick run on the 10-day moving average at 0.6755.

The FED released a calendar of Q1's auctions of dollar liquidity. Click to see it: http://www.federalreserve.gov/newsevents/press/monetary/20081219a.htm

European and Asian equities are down sharply on recession concerns. US equities are set to open lower today with Dow futures down three quarters of a percent. S&Ps and Nasdaq futures are both down one percent. President Bush raised the notion of an ‘orderly bankruptcy’ yesterday at the American Enterprise Institute and TSY Secretary Paulson appeared to support that stance in comments last night. Bonds are down after a week of gains. The thirty year is down about ½ a point to 140-28. The ten year is down nine ticks to 127-23. The five and two year are also down, albeit less than 0.1%. The dollar index is up almost two percent. EUR/USD is down about 250 pips to just below 1.4 while Cable is down three tenths of a percent. The USD/JPY continues trading just below 90. USD/CAD is up one and a half percent. Crude continues falling and is down $2 to $34.15. Gold is taking a beating, falling about $26 to $834. There are no economic releases or FED speakers today.

January NYMEX crude fell to $33.44 lows, down $2.78/bbl in electronic trade. The sharp losses have been attributed to activity ahead of the January contract's expiry at the close later today. February crude, which will take over as front-month on Monday, is actually trading 2 cents higher on the session, st $41.69/bbl. Expect wild price swings in the January contract though the session.

Shares headed south in Europe in morning trade on continued growth concerns, and the slide in oil prices hurt energy shares. The FTSEurofirst 300 shed 1.5%. The commodity-laden FTSE 100 lead the charge downward with a decline of 2.7%. The DAX fell 1.2%. The CAC 40 dropped 1.8%. German producer prices fell 1.5% m/m and in-line with estimates, suggesting that Europe's largest economy is being hit with either disinflation or deflation depending on one's view. Merrill Lynch cut its earnings expectations for European banks by 15% for next year and 25% in 2010. German media reports say Berlin is considering an additional economic stimulus package. The yen tumbled following the BOJ's announcement that it was cutting its main interest rate to 0.1%. EUR/JPY plunged 2.2%. USD/JPY was off 0.5%. GBP/JPY fell 0.6%. The dollar muscled up against European currencies. EUR/USD fell 1.7%. Cable slipped 0.1%. The Swissy jumped 1.6%. Bonds were little changed. The 10yr Bund future fell 4 ticks to 124.50. The 10yr Bund yield was up 1bp to 2.98%. The 2yr Schatz fell 4bps to 1.89%. The 10yr Gilt was up 1bp to 3.19%. The 2yr was flat at 1.27%. The 10yr JGB dropped 6bps to 1.24% after the BOJ said it would buy back more government bonds every month. The US T-note added 1bp to 2.07%. Oil was mixed after the Saudi oil minister said $75/bbl was a price that would help promote stability and dependability in global markets. WTI dropped 6 cents to $41.61 after falling below $36/bbl overnight. Brent rose 25 cents to $43.61.

Another volatile London session saw the dollar add to its recent gains versus the European majors, as EUR/USD slid under 1.4000, down from the 1.4720 peak posted on Thursday, while cable dipped under the 1.5000 mark yet again. The ECB's move to cut deposit rates yesterday was likely a factor behind the euro's slide, though the dramatic gains seen earlier in the week were more than likely overdone, as thin liquidity exaggerated the rally. USD/JPY meanwhile, moved back under 89.00 following the already priced in BoJ policy moves, and overall, the yen maintained a stronger footing, as risk trades come unwound into the end of the year. For the Friday session, the US economic calendar is empty, which could move the focus to equity markets, and any news on US automaker bailouts, where a bridge loan deal is reportedly near for GM and Chrysler.

The dollar maintained a firmer tone during the European morning. Thin trading conditions exacerbated price action and there were very few prices trading on EUR/USD's move lower, which eventually resulted in a 1.3987 low, although there was interest in either direction before prices broke back below this psychological level. Cable traded in tandem with EUR/USD and hit 1.4948 lows, before EUR/GBP heaviness added a modicum of support. The cross retraced some of its recent gains to hit 0.9330 lows on broad based euro weakness. Elsewhere, JPY traded on a firmer footing against EUR, GBP, AUD and CHF, while USD/JPY was relatively stable as the dollar benefited on position adjustment and safe haven trading. USD/CHF extended its recovery to 1.1021, while the CHF crosses were steady, with EUR/CHF around 1.5400 and GBP/CHF traded ahead of 1.6450 versus overnight lows of 1.6200.

The statistics offices in the six German states that release CPI data prior to the announcement of the national inflation rate said they plan to provide the information on the following dates and times, which are subject to change: *Saxony: Dec 29, sometime in the morning *Hesse and Brandenburg: Dec 30, 0900 GMT *Bavaria and Baden-Wuerttemberg: Dec 30, 1100 GMT *North-Rhine Westphalia: Dec 30, no time given According to this information, German national CPI can be expected December 30 after the last state has reported.

German November import prices are forecast down 2.7% m/m vs. the record 3.6% decline in October. The annual growth rate of import prices is expected to be a mere 0.3% following a 2.9% rise the month earlier and the 7.6% surge in September. The data will be reported at 0700 GMT Monday and broadcast live on Need to Know News’ Scream Audio. October Import prices excluding oil were down 0.2% m/m following September’s revised 0.4% increase, and rose 4.1% y-o-y vs after a revised 4.7% climb. Export prices tumbled 0.7% m-o-m after falling a revised 0.1% in September. Prices for exports were up 2% y/y after climbing a revised 2.8% in the previous month.

Economics minister Yosano said the purchases would greatly help corporate financing until next year.

EUR/USD's collapse continued in thin trade, with the bottom falling out after 1.4200 and 1.4150 gave way. Losses extended to 1.4053 on very modest flows and wafer thin liquidity. There were very few prices trading on the two big figure fall from around 1.4250, where prices settled in early European trade. The USD, GBP and JPY benefited the most on the fall out, which could target further downside levels as the correction from yesterday's highs is distorted on the way down. EUR/USD shorts could challenge 1.4000, with this level a temptation for speculative accounts in thin conditions. Sentiment turned sharply since yesterday's New York morning session, with dollar buying momentum picking up as safe haven trades are favoured in to the Xmas holiday. The ECB also followed up with a cut in its depo rate to encourage money market normalcy, while ECB Trichet reiterated his comments on a US strong dollar policy and France's Lagarde warned that FX volatility was a problem for exporters.

GBP experienced further volatility in thin European trade. EUR/GBP made an early European move higher to 0.9475, but was unable to rechallenge the 0.9500 level and headed lower under the weight of broad euro selling. Cable whipped around in an 80 pip range after making an early challenge of 1.5000. EUR/GBP's move higher forced through stops below 1.5050 and the pair settled at 1.5015 lows before rallying back towards 1.5100. Further gains were capped, with the dollar in the ascendency as safe haven trading favoured dollar upward momentum in to the weekend. Cable was weighed a touch by vague talk that UK banks could be downgraded, but generally cross currents and short term order flows influenced in the absence of key economic data. Cable is at risk of breaking 1.5000, but could find support on EUR/GBP's correction, which extended below 0.9400.

CHF consolidated after Thursday's price swings, leaving USD/CHF settled close to 1.0800 after experiencing an Asian range of 1.0745-1.0850. Meanwhile, EUR/CHF is supported around the 1.5400 level after rallying out of 1.5356 lows in Asia, which compared with Thursday's 1.5290 base. Thursday's bid for CHF came at the expense of the dollar and then the euro, but prices have returned to more orderly trading conditions, which has allowed some of the liquidity driven gains to come undone. Overall, the market is broadly in favour of low risk positions ahead of the weekend, which benefits the USD, JPY and the CHF to a lesser degree. EUR/CHF remains capped at 1.5460 and is skewed to further downside tests after yesterday's bearish technical breakout. A retest of 1.5295 is seen in the near-term and a break below would open up the downside to the 50-day moving average at 1.5225.

Bund debt futures are higher in early morning trade, while Gilts opened little changed and stock markets have declined. The domestic agenda is light today, with this morning's German November PPI data showing a larger fall than expected, with the headline reading slipping to 5.3% y/y (median 6.0%) from 7.8%. The March 10-year Bund future is up 23 ticks at 124.76, while the corresponding Gilt future is up 2 ticks at 122.06. The 10-year Bund cash yield is down 3 bp at 2.94% and the 10-year UK yield is down 1 bp at 3.17%. Meanwhile, DAX opened down 1.1%, while FTSE 100 opened down 1.2%.

The BOJ this morning cut its benchmark rate 20bps to 0.1%, and voted to buy up commercial bonds. Shirokawa, the Bank's governor, said BOJ operations are not aimed at lowering long-term rates.

* U.S. calendar quiet today, focus on Fed's quantitative measures * Canadian calendar has Nov CPI, seen slowing to 1.3% y/y (median 1.8%), core to 1.5% * BoJ cut overnight call rate to 0.1%, as expected * ECB Trichet: Cut in depo rate should encourage money market to function normally * U.K. Dec GfK consumer confidence rose 2 points to -33, versus the -39 expected * U.S. Treasury yields little changed Fri; global rates lower on ECB, BoJ moves * EUR-USD has consolidated after wide swings Thursday * NYMEX crude remains under $37; gold and base metals down; copper at 5-yr low * Asian stock markets mixed; Nikkei weighed down by auto sector * Japan's Cabinet Office forecast -0.8% FY2008 growth, then flat through 2010 * Japan Oct all-industry index declined 0.5% m/m SA, extending recent downtrend * NZ Nov credit card billings fell 0.7% S.A. on year, from +1.4% in October * S&P lowered outlook on GE, said 1-in-3 risk of downgrade from AAA in 2-years * Fed's Fisher: consumption cascading downhill, Fed not shy of using every means * Obama financial team picks accelerated due to crisis: Shapiro, Gensler, Tarullo

Panasonic and Sanyo described the move as a capital and business alliance. Panasonic said it would spend at least $4.5bln to buy a majority stake in Sanyo.  The smaller firm's current shareholders include Goldman Sachs, which has already agreed to sell up to Panasonic. A joint news conference is due at 0830 GMT.