Cautious Trading
28-12-2011
The broad markets largely produced a day of sideways trading as thin volumes continued to take their holiday toll. The major currencies produced consolidated movement throughout Tuesday as data and news proved to lack impetus. There will be no major data releases today and this will leave existing sentiment as king. While the European financial crisis continues to lurk in the shadows it is highly unlikely that any big developments will unfold before the New Year. The EUR/USD pair, followed by the GBP, AUD, and JPY performed nearly dormant on Tuesday. Short term trend trading is one way to take advantage of the broad markets for those who choose to participate. The market does have three days of trading left this week, including today, to make its mark, but it is also probable that any direction Forex, equities, and commodities take now will find a counter balance when 2012 begins.
Gold traded slightly lower yesterday, but Crude Oil in fact climbed back to near its recent highs. Crude Oil remains the source of speculation based upon unease among investors who continue to watch the political manifestations of Iran and other Middle East nations. However, political whirlwinds may prove short lived and may not be enough to keep the price of Crude Oil high if the global economy proves to lack the ability to show strong prospects. Thus the likes of Europe, the U.S., and Asia are all being watched for the potential of changes in demand. Gold in the meantime has found itself languishing in the shadows of the EUR/USD pair, this as the Greenback continues to foster safe haven fanfare. The precious metal as of this morning is around 1588.00 USD. Gold has traded a bit weaker so far this week, this as the EUR has failed to show much of an ability to bounce upwards.
But traders must take into deep consideration that the broad markets remain locked deep within a holiday mode. Volumes are particularly thin as most institutional houses and their traders are on the sidelines celebrating their holidays. The value of Forex pairs, equities, and physical resources will all go under a microscope as investors begin to return in force after the New Year.
While data will be nearly non-existent today, tomorrow will offer German inflation numbers and plenty of reports from the States. Friday will once again be very quiet with only the U.K. offering statistics, this as investors once again eye the doors for early exits in order to partake in the long holiday weekend. Therefore if any real breakouts were to occur, today and tomorrow might be those days. While it is unlikely that the market will get hit with something unexpected from corporate earnings or some type of official statement from a government source today, traders who do participate should remain alert at all time.
The EUR/USD pair has moved in minimal range this week. The volatility that the Single Currency and the Greenback has seen the past few months has certainly not gone away for good. The EUR will continue to be examined closely as questions persist about Sovereign Debt from Europe and the stability of its banks.
