Friday January 4th: No obvious trends yet to emerge
Since the temporary fiscal cliff solution was agreed upon, EUR/USD has gone from 1.3175 to 1.3300 and back to 1.3050, cable has had a similar rollercoaster making new trend highs at 1.6380 before crashing back to 1.6100, USD/JPY has been fairly steady just above 87.00 and the AUD/USD has rallied from 1.0380 to 1.0520 and held onto most of these gains.
What to make of all of this? Nothing yet, it’s the first week of January and trends are unlikely to start now. Risk is likely to stay ‘on’ for a few weeks more so that should benefit the AUD overall; the necessity of buying EUR as a safe haven has passed for now so it may stay softish; the JPY market is still very short so the MOF and BOJ will need to make some aggressive moves very soon in order to keep the bearish Yen momentum on track.
Last day of the holidays today, and back to normal from Monday.