Holidays in Full Swing
27-12-2010
The USD heads into Monday’s trading showing that he has been able to keep its rather strong pace going against the EUR and GBP. The markets will be extremely thin today because many nations continue to have official holidays including the U.K., Australia, and Canada. Volume will be light all week long and traders who do decide to partake in the marketplace will have to beware that divergence could be an important part of the landscape. Most major investors will be gone until after the New Year, so traders will have to be ready for sudden gyrations that may not have much meaning.
There will be no major data today, but tomorrow the U.S. will release its CB Consumer Confidence reading and the S&P/CS Composite 20 HPI. What will also prove of interest for traders will be any ‘whispers’ that begin emerging regarding the results of holiday shopping from the U.S. and Europe. The housing and consumer spending sectors remain a vital component of any broad economic recovery and both of these important components still have many unanswered questions.
The EUR appears to still have many hurdles to jump regarding wavering sentiment due to the unresolved concerns in the European Union about its ability to create a cohesive financial plan to help resolve debt problems. In the meantime Portugal and Spain may find that they are facing a gauntlet of tests ahead as traders start to focus on their economies.
The Sterling remains under the shadows of a weak EUR as plenty of questions remain about the ability of the U.K. to create robust economic growth. The mixed economic data from the U.K. continues to create concerns also for the GBP. The U.K. is closed today and tomorrow so it will be of interest to see how the Sterling trades. However with many investors away internationally, the Sterling is not the only currency that will have a lack of domestic traders. While in the midst of the holidays there will be very little economic data from the U.K. this week.
The JPY and AUD have both gained in recent trading against the USD, but it remains to be seen if this is merely a range trade due to imbalances in volume. Australia remains on a holiday today and Japan should also experience relatively light trading in the coming days. China did make some news this weekend when they officially increased their interest rate in an effort to battle domestic inflation and questions remain about how many other incremental increases China may have to use in order to tame its own economy. The interest rate change from China will be watched carefully by international market participants, particularly within the commodities. Gold has remained in a fairly consolidated range the past week and with the holidays in full swing it should be watched carefully for any attempts at manipulation. Again, traders who choose to participate in the markets this week should be cautious and understand that full volume will be absent until sometime next week, which means short term results may carry little long term significance.
