The Forex trading week opened with a relatively quiet Asia session. Following a week that saw unusual volatility, and a weekend meeting that included global finance leaders, many traders were set for a potentially wild open. Despite dollar negative comments coming out of the weekend summit, namely more talk of countries looking to move their reserves out of the weak USD, the Forex markets opened steady for the most part. AUDUSD and USDCAD entered the week dealing higher then they had at the close of trading on Friday in New York. AUDUSD opened 50+ pips to the upside, in the .8960s, while USDCAD enjoyed a 30+ pip improvement to deal into the .9770s.
The correlation between equities and the high yielding carries continued into the opening session of the week as well. Following the beginning of Asian equity trading , currency traders bid the pairs toward their session highs. EURJPY enjoyed a quick 60+ pip pop from lows around 162.40 to the 163.00 handle. The pair then meet with stiff offers, and the figure area became a short term resistance level. AUDJPY saw a 80+ pips gain, putting it within striking distance of the 100.00 level once again, for the first time in several sessions. USDJPY , itself briefly dealt over 111.00, but offers quickly rushed in to stuff the pair back down. As trading continued through the session, most of these pairs surrendered a chunk of their earlier gains, EURJPY fell towards the 162.50 support level, and USDJPY was dealing back into the 110.70s in late trading.
Ahead in the upcoming London session, no economic data is scheduled to be announced. With many pairs spending the Asia session in either tight ranges or a consolidation pattern, it would be reasonable to expect some sort of a break out from European traders. The carry trade has once again emerged as the trade of choice over the past weeks. Whether bullish or bearish, these pairs will certainly continue to add volatility throughout the market.
