Forex market misses liquidity! | 03 January 2014

Review of the past week

Christmas week on the Forex market has finished and we can make some conclusions. A quite, modest trades were made with all currency pairs. Investors were rather deliberative when it came to opening trades in the advent of Christmas. When the holiday was over, the market turned to be rather more interesting. Friday was the most eventful day by right, when quotations of major currency pairs showed an abrupt growth and reached fresh year highs.

European and British currencies did not manage to keep their advantageous positions and USD growth could be noted. Yield of the US 10-years' treasuries grew up to 3%, which allowed investors to fox their profit. Historically, growth of the US 10-years' treasuries is positive towards USD.

Good macroeconomic stats from Japan did not encourage bears to open short positions for Usd/Jpy. Positive reports on retails and inflation provided Japanese currency with the fuel to grow up to support level of 104.64. Nevertheless, Japanese regulator is expected to increase stimulative program in 2014, which restrains growth of Japanese national currency. US Dollar/Yen pair closed trading week at the point of 105.16.  

Forecast for the week December 30, 2014 – January 3, 2014

Euro/dollar:

This week will be one more short week for currency market. On Jan 1, New Year is celebrated and the most part of countries will have bank holiday. EU is not expected to provide important macroeconomic releases. As soon as in the New Year, on Thursday, market will receive the data on ISM manufacturing index from the USA. An ascending trend in the US manufacture sector has been witnessed over recent months. Continuation of this positive dynamics can be predicted, which gives an incentive for a short-term demand in the US currency.

Investors will also monitor the bond market. Growth of the US 10-years' treasuries above 3% will provide USD with a certain support. In general, Euro is supposed to demonstrate a flat trend, within the range of 1.3650-1.3850.

Pound/ dollar: On Thursday and Friday market participants will be supplied with PMI for construction and manufacturing. Great Britain is on the way of a steady economic recovery. The data just above median line of forecasts can be expected that will render British currency with a short-term support. In its turn, it can lead to a partial closure of long trades and technical correction may take place for the Pound/ dollar pair. In general, flat position within the range 1.6350 -1.6550 can be expected.

Dollar/Yen: Only one trading day will be active in Japan: it is Monday. All other days of the week will be holidays for bank entities. So, the profit may be fixed on long positions on Monday. For as long as 9 weeks, Dollar/Yen pair is in growth and it is quite reasonable that investors will fix their profit prior to taking long holidays. The first two days can be the days of consolidation for the Dollar/Yen pair. In general, USD/JPY is supposed to be located within a flat range 103.80-105.80.