I hope you had a super Xmas break.
Quiet start to the week and probably quiet week altogether. FX traders have been pretty much side-lined over the festive break and not willing to put on any new positions given the lack of data and event risk. As I wrote last week, there was a chance with the US open that investors and traders would use the lack of liquidity to put on new positions and test the high and low. However this was not the case and the FX market remains pretty subdued. It looks likely that this trend will last into the new year as traders do not want to risk dampening their “year” (end). So expect tight ranges for the coming week.
My sentiments overall remain the same. The USD will remain king of the castle and while I came close for the 2nd year running to predict where the currency would end on the 31st December, I believe I probably missed it by a couple weeks tops. In other words I will be looking for the USD to mount an attack on PARITY (EURUSD) within the first few weeks of 2016. Furthermore I expect the GBP(USD) equally to mount an attack on the years lows 1.4566 (ish) we saw on the 13th April. As I have notes previously, the FED’s decision as to when next to raise rates will be DATA DEPENDENT so over the coming weeks as more and more data is released we will have a better idea on when we will see the next US rate hike…FX traders will be watching this carefully and looking for signs for when this is likely to happen. What we do know for certain is rates are going higher, therefore the USD will remain the currency to buy.
Have a good week ahead
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