As we enter this Christmas holiday and the markets essentially begin a two-week hibernation as of today until the week following New Year’s day regarding volumes, those who choose to trade should make their decisions carefully. Without data to decipher and a lack of institutional participation many of the markets will become the domain of day traders who will have to be on the look out for the odd large position that will stir the pot frantically. Wall Street will be open today and tomorrow but many desks are short-staffed and have teams who will be told to monitor systems and specifically told NOT to ‘touch the merchandise’.
The EUR, GBP, and JPY have all traded in fairly tight ranges since the FOMC Statement last Thursday. The Single Currency came off of its highs per the Fed’s 10-billion dollar taper but it certainly has not crashed and it has in fact maintained its stronger trend. Sterling which has been in a consolidated pattern for over a month now has not shown a negative reaction to the Fed’s slight policy change. The JPY has also kept its weakened pace and has kept creeping along its technical resistance.
While the holiday comes into full force as of tomorrow afternoon and many major market shutter for a couple of days it may be a good idea for traders looking for a barometer to watch the Asian markets as they open on early Thursday. Having said that it is likely that the Asian markets and their results will have to be with a very short-term reference point.
Economic data from the States today shows Personal Spending came in below expectations and this continues to feed into sceptical doubts about the health of the American economy. There are also reports coming from retailers that shopping this holiday season has not been as strong as last year’s numbers.
Tomorrow the Core Durable Goods Orders data will come from the U.S. and New Home Sales will follow. But most of the market will not be paying attention to these outcomes as investors leave for the holiday early.
Traders looking to take advantage of consolidation – and technical support and resistance levels, will get their chance over the next twenty-four hours, but they should use risk management wisely and be ready for sudden bursts and gaps.