Broad-based positional adjustment ahead of Chinese New Year holiday
The EUR started to ignore continued negative headlines and this has had an effect on itchy profit takers ahead of the Chinese New Year holiday which starts today. Chinese financial markets are shut for a week and other major centres like HK and Singapore will be closed on Thursday and Friday. Nobody likes to sit on positions for lengthy periods of time and I suspect that this is what happened to trades like Gold and CAD/JPY also.
Other favourite market trades like short EUR/GBP and short AUD/USD may also start to come under pressure if the domino effect takes hold.
The Japanese trade balance and NZ PPI are the main events on today’s economic calendar.