Quiet as a church mouse
We’ll keep this update short as there is an infinitesimally small amount of news flow out there and even less that is having an effect on currency markets.
Anyone who is on a trading floor anywhere is making sure that they do not set their desk on fire while liquidity is low and there is still a tremendous amount of nervous tension in the prices of at least 6 of the G10 currencies.
What needs to happen?
USD bulls are looking for a pullback to add to their positions whilst bears are staying well away from standing in front of a freight train as we count down the days until President Trump takes the reins. GBP bulls are happy to wait for the Bank of England to re-emerge with a hike in the base rate next year in response to a rise in inflation whilst those looking for a falling pound must wait for the next political spasm.
EUR sellers are also waiting on politics and any further repercussions from the attack in Berlin at the weekend despite an increasing positivity over some of the economic news coming of the Eurozone as a whole and the prospects of another bailout of Italian banks. JPY bears are going to milk this USD rally for all it’s worth and those bullish on the JPY have learnt their lesson and have packed their bags for now.
I could go on but the crucial thing remains that answers to these questions are not going to be forthcoming in the coming week or so. In fact we think this feeling of nervous tension perpetuates through most of January too. If that’s not an incentive to not give up the booze on January 1st then I don’t know what is.
The data calendar is pretty quiet today although US personal income at 3pm could easily give the USD another pop higher but we think interest will be low.