If today’s start to European trading is any indication as to the level of activity of the week to come, or lack thereof, traders will have to carefully pick their spots to be profitable. On the whole, currency pairs were held in relatively tight ranges and volumes were light as we look towards a US holiday (Thanksgiving) on Thursday. All weekend global financial news, namely the G-20 meeting, was digested during the Asian Session. European economic data was meager on Monday. As of now, there are simply no catalysts to entice London traders to open positions at the start of a historically quiet week of trading.

The primary theme to the session thus far has been a continuation of Carry Trade selling. EURJPY has traded south of 162.00 since the London open. Both components of the cross, EURUSD and USDJPY, have shared the losses. Though these pairs are in the red for the day, the moves are small in magnitude compared to those of last week. Moreover, in glancing around the FX market at most other currency pairs, one can see that the net changes from Friday’s NY closes are minimal.

Unlike last week, today’s price action feels unconvincing, probably due to an absence of volume. Trading conditions are simply brutal. Illiquidity is quite evident and those with agendas or orders of size have easily pushed the market around. This was evident in USDCAD at 0415 EDT with the pair trading at 0.9732. Within two price changes, it dealt down to 0.9720. The next price was 0.9714. Following a low around 0.9707, USDCAD turned higher in a blink. Once 0.9732 was eclipsed, it took two minutes to hit 0.9770. This is an illustration of how thin volume markets can behave. They are extremely dangerous and traders can easily find themselves on the wrong end of a position, committing to a market that has very little to offer in return. It is essential to employ strict trading discipline.

New York traders have no significant pieces of US data to digest today. Canadian September Retail Sales are out at 0830 EST (1330 GMT), with the market expecting a result of C$1.150. Canadian Wholesale Sales come out simultaneously, with a consensus of 0.0% (prior: -2.0%).

Upcoming Economic Data Releases (New York Session)

  • 0830 EDT Sept Canada Intl. Securities Transactions, consensus: C$1.150B (relevance: medium)
  • 0900 EDT Sept Canada Wholesale Sales MoM, consensus: 0.0% (relevance: low)
  • 1300 EDT US Nov NAHB Housing Market Index, consensus: 17 (relevance: medium)