After strong rallies in 2008 and early 2009, USD peaked in March. In order to combat the worst recession since the World War II, the Fed reduced the policy rate to an unprecedentedly low level and implemented a series of quantitative easing policies. The 'twin deficits' problem (current account and fiscal deficits) has put USD's status as the reserve currency at risks and triggered investors to dump the currency.

Data over the past month largely produced upside surprises relative to market forecasts resulting in a sustained pickup in equity markets and a relatively sharp rise in government bond yields. Since our last publication on December 4, 2009, 10-year rates in the markets that we cover were up as much as 16-38 basis points.

For most of 2009 the USD traded weaker pressured by low yields and improving risk appetite. USD in ending the year near a three and half month high supported by a shift in focus to improving US economic outlook and Fed rate hike speculation.

Herein we provide a quick summation of our top trades for 2010. Each trade is discussed more fully in the geographic and product-specific sections of this report.

Trading was fundamentally transformed by the European Age of Discovery, which was pioneered by Portuguese navigators, such as Bartolomeu Dias and Vasco da Gama, who set sail down the West African coast, eventually making it to India by the end of the 16th century.

Theme #1: Peak of the cyclical momentum

Risky assets generally thrive when growth is in the early - and normally fastest - stages of recovery. As this year's brisk recovery has happened alongside massive cost-cutting earnings have been in a ‘sweet spot'.