Katrina is expected to make landfall as a category 5 hurricane with wind speed upwards of 150mph The Gulf Coast region directly in the path of the hurricane is responsible for fully 25% of US domestic oil production. Additionally the Louisiana Offshore Oil Port, the biggest U.S. oil import terminal responsible for processing 1 Million bpd, stopped making pipeline shipments to refineries from its onshore facilities because of the storm. As a result, oil futures opened above $70 bbl in electronic trading in NYMEX before retreating slightly to $69.70 bbl. The 5% spike in crude hurt the dollar in the Asian session with EUR/USD trading up to 1.2345 before option related defense of the 1.2350 barrier brought the pair back to 1.2325. The week ahead is shaping up as one of the most unusual weeks of the year with a very busy calendar in US that includes Chicago PMI, ISM Manufacturing and Non-Farm Payrolls on Friday. At the same time the Eurozone expects reports on German Retail Sales and both German and French unemployment figures. All of this upcoming economic activity is offset by the fact most of the worlds dealing desks are at half staff as market participants enjoy their last week of summer vacation which culminates in Labor day holiday in US next Monday. This unique combination of low liquidity and a large array of market moving events could result in increased volatility as traders adjust to a variety of market moving news. Furthermore, if Katrina's damage is as severe as the experts fear, her impact on the currency market may overwhelm the value of any regularly scheduled economic data this week as the massive destruction that it will wreak will hurt not only the US oil industry but overall US economy as well.