FOREX TRADING

High Beta Currencies Follow Equity Markets Lower

Despite a meager data schedule, the FX markets have experienced relatively large moves over the course of the day as the unwind of positions ahead of year end were exaggerated by thin liquidity conditions. Equities are sharply lower across Europe and Latin America, and even gold has sold-off markedly from its $1195 highs to trade at $1184 levels.

After the excitement of the moves in the Asian session that saw major technical barriers breached, the USD has made a recovery against virtually all of its major and EM peers; with the exception of the JPY, where selling pressure has kept the pair subdued around 86.50 levels. The hardest hit currencies have been the high-yielding AUD and NZD which are both down around 2.5% on the day, and much has been attributed to the unwind of cross-JPY positions ahead of the year end.

Patchy liquidity is likely to persist tomorrow as most US desks stay home for the long weekend, but there will at least be some interesting economic data releases. Sweden publishes its Q3 GDP reading and Retail Sales figures which are both expected to show improvements from prior figures, followed by Eurozone Consumer and Industrial Confidence data. Again the consensus is looking for an increase from October levels, but the readings are firmly within negative territory at -18 and 1-21 respectively so improvements are only likely to be modest. Also expected will be the Swiss KOF Leading Indicator and Mexico central bank rate decision.

AC Markets
http://www.ac-markets.com

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