The US recovery is intact with the deficit at its lowest in four years. A renaissance in energy production the key, prompting some analysts to revise higher their forecast for US growth. Friday's payrolls are the next big test. Adam Cole, Head of Forex Research at RBC Capital Markets says he expects the employment data out at the end of the week to continue the positive trend.

SHOWS: LONDON, ENGLAND, UK (REUTERS - ACCESS ALL) (JANUARY 8, 2014)

1. RBC CAPITAL MARKETS HEAD OF FOREX RESEARCH, ADAM COLE, SAYING:

JOURNALIST ASKING ADAM COLE: 'Will the nonfarm payrolls confirm this trend in the US economy, do you think?'

ADAM COLE: 'I think that's certainly the expectations embedded in markets and we'll get some final clues, of course, from the ADP report today and market generally expecting a figure in line with the recent trend of about 200,000 or so job gains per month. And barring any big surprises in the high frequency indicators, we kind of agree with that. So I think cementing the view that the recovery is solid, if not spectacular.'

JOURNALIST: 'So where does Dollar/Yen go now? Are we heading back up to 105?'

ADAM COLE: 'I think we can probably grind a little higher from here. Concern on Dollar/Yen is primarily that the market is very heavily positioned already. All the half dozen or so indicators we looked at for guidance on market positioning, that pretty much all signaling that the market is well-subscribed to the Dollar/Yen higher move. And for that reason, I think the way we trade from here is a grind higher but a growing risk of very material correction lower. So yes, we can grind higher but I think it's hard work and the risk of a positioning-led correction is getting quite substantial.'

JOURNALIST: 'But is there anyone out there not playing the short Yen trade right now?'

ADAM COLE: 'I don't think so. And I think that's the worry that if you look at asset managers returns relative to Dollar/Yen, correlation is incredibly high. The IMM positioning data again signaling that the CTA sector is very, very short of Yen. And that I think is the danger and that's why it's a bit of a struggle to make much headroom from here, is that simply the market is very heavily bought into that consensus view.'

JOURNALIST: 'Where is the Euro going? I mean clearly, it's being held down a little by the latest inflation numbers, expectations of what the ECB is going to do. What do you think the ECB is going to do?'

ADAM COLE: 'Very little and what I think they won't do is mention any specific concerning the currency again, which something they haven't done since February in any kind of meaningful way. And our view is that the near-term risk is still to the top side for the Euro partly because we think that the risk premia in the Euro are still compressing and that trend is ongoing as peripheral spreads come in and markets generally take out the premium the Euro carries and equally because we think that the Dollar bullish - again, very strong consensus view is going to struggle to find much traction in this.'

JOURNALIST: 'I want to get a final word on the Canadian Dollar as well. People seem to be piling out of the Canadian Dollar on the back of some weak PMI numbers. What is it - how long-term is this trade now?'

ADAM COLE: 'We think it is a long-term trend. Shorter term, maybe feels a little bit like we've overreacted to some really second-tier indicators. But longer term, I think if you're looking for a structural story for the year, then the size of the Canadian current account deficit, the difficulty that Canada might have attracting capital to fund that position in the absence of rate hikes which we certainly don't expect points to a supply-demand imbalance for the currency which is medium term certainly very negative.'