USD rallies in thin conditions - Morning Session - GMT

• USD rallies in thin conditions
• No news, likely technical trade
• Equities fall driving EURO lower

Overnight Preview

• Look for two-way action and consolidation
• Better liquidity will help with ranges
Looking Ahead to Wednesday
All times EASTERN (-5 GMT)

• 11:00am USD FOMC Member Kohn Speaks
• 1:00pm USD FOMC Member Stern Speaks

Summary
Despite a US holiday and thin conditions the USD rallied after the start of the mostly-closed New York markets opened today; traders note that technical factors likely drove trade as the USD rose to new highs against the Swiss Franc. Rising to a new two-year high  for a high print at 1.1880 conditions were dismal as traders were forced to cover back open shorts expected to be set into Wednesday. News was light as the Greenback continued to rally all day making significant highs against all pairs but still holding existing monthly ranges for the most part. EURO  sank back under the 1.2600 handle in a surprise move as US equities fell back for triple-digit losses; low prints at 1.2508 making a mess of near-term balance sheets. GBP also fell in sympathy with EURO for a low print at 1.5361 finding stops under the 1.5500 handle layered all the way under 1.5400; traders note cross-spreading continued for Yen as the Yen held firm across the board. USD/JPY held earlier ranges but did drop on equities weakness for a low print at 97.30 before recovering back to trade the 98.00 handle but was unable to hold. In my view, the USD benefited today from super-thin conditions and poor liquidity driving back to test previous highs but is unlikely to hold gains. Two-way trade is likely into tomorrow and the lows from the major pairs are likely to hold at least for one try. Tomorrow’s data is likely not to be market moving at all suggesting that more technical trade is coming. Look for two-way action tonight in Asia with light follow-on buying of USD early overnight.