FX Daily Update
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Dollar Within Tight Ranges Ahead of Christmas…
Tue, Dec 23 2008, 11:10 GMT
by Lena Manousarides
FXstreet.com Independent Analyst Team
This week started with currencies trading within tight ranges, as Christmas Holidays took the stage and thin trading conditions are the theme from now until next week! The EUR/USD attempted to correct its Friday losses, by making a move to the upside towards 1.41; however this didn’t find many followers therefore the pair dived once again towards 1.39. It does look possible that the range for now could be 1.38-1.42 in the coming days.
The economic calendar today has some important releases out of the US, with GDP, existing home sales, new home sales and also consumer confidence. All data will be monitored closely by the market participants, however unless the numbers deviate much from the forecast, we don’t expect any major shift in the current muted trading environment. All numbers are expected to be lower than last month; however the markets now are aware of the bad economic conditions and therefore only better than expected news can really move the market.
This morning we had GDP out of the UK, with numbers worse than expected, but what really did it for the pound was GDP’s downgrade much lower, which saw the pound falling against the dollar and the euro.
EUR/GBP is trading marginally higher these days, and the monthly chart shows a rise of 1300 pips, a lifetime record for the pair, which usually does 200-400 pips maximum. What caused the big rise in the pair is the differential between interest rates and with traders already pricing in another rate cut from the Bank of England or even zero rates in the coming months, the pair is heading for parity sooner rather than later.
The oil and futures are also trading within tight ranges and traders are still wary of the economic deteriorations as well as the automotive industry which although it had a helping hand from the US government, still suffers and more than likely will continue to do so during the next year.
December has been a very volatile month so far, with euro advancing against the dollar aggressively over the last few days and traders squared their positions ahead of the New Year. The dollar is still the winner of the year however and the fact that it gained more than 40% against the pound and 30% against the euro with no economic fundamentals to support its move shows exactly the environment that we are experiencing at the moment and how unpredictable the next day’s trading will be.
I wish all of you a Merry Christmas and a Happy New Year and let’s hope for a better economic tomorrow during 2009, although let’s admit that is not hard to accomplish since 2008 has been a meltdown year! With economies suffering across the globe, the banking sector in a shambles, unemployment getting out of control, corporation layoffs reaching new daily highs, the only thing we can wish for is some stability in the markets and a new “bail out plan” which will actually bail out global economy from recession in the coming years...
Published on
Tue, Dec 23 2008, 11:17 GMT
Archive
- Dollar Up Again Thanks to Risk Aversion!
Published On Mon, Jan 12 2009, 15:57 GMT
- Crunch Time for the Dollar!
Published On Fri, Jan 9 2009, 12:19 GMT
- Dollar Direction May Be Determined this Week!
Published On Wed, Jan 7 2009, 10:56 GMT
- New Year Starts with Dollar Strength!
Published On Mon, Jan 5 2009, 12:48 GMT
- Dollar Within Tight Ranges Ahead of Christmas…
Published On Tue, Dec 23 2008, 11:10 GMT
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