Light Trading Brings Volatility to the Dollar
Posted on 23. Dec, 2008 by admin in USD Analysis, USD Economic Analysis, USD News
The light trading that is typical during the close of the year is having an impact on the movement of the Dollar. National holidays in Japan have significantly limited the amount of liquidity in the forex market, while the approaching holidays in the U.S. has left trading desks working on a skeleton staff. This has led the EUR/USD to trade in large price swings lately due to the limited amount of players increasing the pair’s volatility.
At one point in yesterday’s trading, the Dollar reached as low as 1.3923. Despite the difficult market conditions the Dollar finished the day relatively unchanged at 1.3978. Against the GBP, the USD ended yesterday’s trading session nearly unchanged to close at 1.4829. There was also relatively little movement in USD/JPY as the pair closed the day at 90.23. Analysts emphasize that large movements in these currency pairs are unlikely to occur until after the holiday season.
Today, investors can look for more fundamental data that may help drive the Dollar lower. The U.S. Existing Home Sales and New Home Sales are due to be released today at 3:00pm GMT. If these figures continue the trend of a poor performing U.S. housing sector, look for the EUR/USD to climb to the 1.4150 level.
