Expensive!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Articles in this issue:
Currency Overview – Euro Contagion. We believe that the euro is likely to remain under downward pressure. It seems increasingly likely that eventually the ECB is going to have to come to the aid of some of the debtor countries as a buyer of last resort and embark upon a bigger program of debt purchases. P.2
An Update of FX Fair Values. We have updated our fair value models and estimate a fair value of 1.22 for EUR/USD and 96 for USD/JPY. The USD remains undervalued against all of the G10 except GBP. P. 9
CNH: The Internationalization of the RMB. We discuss the introduction of the new CNH currency – the offshore, deliverable RMB located in Hong Kong. P. 12
EM: Index That. We follow up our AXJ index by introducing a broader index on the tradable emerging market currencies. This allows investors to take a view on the region without taking specific currency views. P. 19
G10: Systematic Trades Recap. The systematic trading portfolio had a negative month in November, with the long carry and commodities strategies contributing to the bulk of the losses. P. 22
G10: Hustle and Flow. IMM and Morgan Stanley internal FX flows suggest upside support for USD and downside risk for the EUR. P. 24