Holiday Trading Volume Coming
20-12-2010
Holiday trading is now upon us and the broad markets have started to turn in sideways action. On Friday the USD continued to hold its pace and sustain some strength against the EUR and GBP. The global bourses traded in a lackluster fashion and were not able to turn in convincing results. Volume will continue to drop in the next few days until it comes to an official stop for the holiday. Christmas is on Saturday this week, but trading will become very light as of Wednesday and start to disappear on Thursday. On Friday of this week most international markets will be closed in the western hemisphere. The USD has stayed on the stronger side of its trend against the EUR, and this has largely come on the back of European inability to convince investors that it has created a real plan of action regarding the financial crisis faced by various member nations.
Data will continue to be rather light today internationally with little on the economic calendar that will be able to shift sentiment. Tomorrow Public Sector Net Borrowing from the U.K. will be published, along with GfK German Consumer Climate reading. On Wednesday the Americans will release their Final GDP numbers and Existing Home Sales figures, but by then it may come down to literally few participants paying attention - because of the holiday starting to occupy the minds of investors who are looking at their office doors.
The GBP continues to trade at the weaker side of its range against the USD and although many questions have emerged about the health of the U.K. economy and economic policy, these are not new issues. Thus the weight of the rather fractured sentiment abounding from EUR overspill must be taken into account. The JPY and AUD continue to find themselves in range bound trading also and offered few surprises the past couple of trading sessions.
Traders will have to be prepared for the possibility of divergent moves all week, this because the lack of full volume in the markets may lead to certain currencies and equities falling prey to short term manipulations. Gold should be watched carefully this week. The precious metal has turned in rather range bound values the past week, but with questionable volume around and the ongoing Korean crisis making news sentiment could find itself under duress and Gold could find itself at the center of attention.
The broad markets finished last week with a stronger USD against the EUR and GBP and its price action the next three weeks until all investors return from the New Year’s holidays could make for an interesting interlude. Plenty of questions remain about the manner in which the E.U. will officially tackle the questions surrounding Sovereign Debt pressures that continue to erupt across the continent. And the U.S. still has a long way to go to prove that it is out of the woods economically and that it can produce stable growth while the housing market and unemployment remain burdens.
This week will be a shortened affair and traders will have to be ready to take advantage of short term movements that may not have much to do with their long term outlooks.
