Range Trading Expected
19-12-2011
The markets finished last week on a rather quiet note. The EUR, GBP, and AUD all finished near their lower values, but trading appeared to be rather tame and ranges were perhaps being tested. The holiday markets will begin to make their appearance as of today as institutional investors begin to move to the sidelines until after the New Year. Volumes will certainly decrease and traders will find themselves having to interpret market moves that may not have total correlation. Economic data was light on Friday and it will stay light today. Tomorrow the States will begin to release housing sector figures, but it is questionable if data this weekend will be able to have any impetus. The main story remains the ongoing saga from Europe and participating investors will certainly be keeping their ears pinned for any rumors of coming downgrades regarding Sovereign Debt.
Equity markets were mixed on Friday as it became clear that investors had started to move to the sidelines. Volumes began to decrease noticeably and there can be little doubt that market participants would like to see some stability these last two trading weeks of 2011. Gold as of this morning is around 1594.00 USD and it might find some interesting ranges taking into consideration the news that the leader of North Korea passed away over the weekend. Asian investors are known to pursue safe havens when doubts rise about economic or political situations. The death of Kim Jong Il will certainly cause some trepidation among investors in South Korea and Japan, and China will also be monitoring all developments. It is likely that equity markets could trade a bit nervously in Asia the next session or two, but if things remain calm within North Korea look for stability to quickly return.
The JPY has been rather consolidated and remains around the weaker parts of its range again the USD. Like much of the Forex markets this week and next, the JPY particularly may present very tight range trading opportunities. Physical resources have been a mixed bag the past few weeks with plenty of questions about pure demand still being asked. Crude Oil has been pushed lower the past few sessions and going into this week should be watched. Oil is now near the lower end of its short term range, but like the entire market its results this week will be have to watched carefully for attempts at manipulation as volumes decrease. And therein is the heart of the story, volumes for the next few weeks during this holiday season will have to be watched carefully. Investors will take a cautious stance and traders will be left to sift through range movements that may not have clear interpretations except for short term tests of values. Equities and physical resources will be a barometer along with Sovereign Debt yields from Europe. A cautious marketplace is likely today. The one big fly in the ointment could be the European financial saga should it ignite with additional news in the coming days.
