Forex markets remain volatile as volumes fall but newsflows remain buoyant
As the last full trading session in Europe gets underway, the dollar has continued to post some small incremental gains against the major currency pairs but with volumes thinning out, momentum is proving difficult to find.
There’s a raft of US data due for release later in the session which should provide some direction with regard to inflationary pressures. Personal income and spending data plus the weekly jobless claims will be studied closely by those traders still in the market to see if there’s any further indication here as to where the FOMC will take its monetary policy next.
Getting this priced into the market may however prove difficult as lower volumes typically result in a level of unnecessary volatility so a degree of overreaction and reversion may well be seen in due course. The run of US economic data will continue right up to the weekend, with Michigan figures, durable goods orders and new home sales all due tomorrow. The impact there figures may have could prove limited given they’re slated for release so late in the European session, but given housing data has already delivered some significant support earlier in the week, these readings certainly shouldn’t be overlooked. Whilst many may be leaving the market now for the Christmas break, continuing newsflows and thinning volumes should ensure there’s no shortage of volatility in the near term.
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