As a result of how thin the markets have been during the holiday season, the EUR/USD traded a rather choppy day yesterday. It opened at 1.2935 and initially dropped below the open to find support at 1.2919. The low was sparked by the CEBR report that mentioned the high possibility that at least one country would leave the euro zone by the end of this year. It later managed to reach a high of 1.2952 but the move didn’t last long as it tracked back down to the support level of 1.2919. It opened in Asia this morning at 1.2933. Because of the positive rise in the Asian equity markets that helped boost risk appetite, the EUR/USD traded higher to 1.2990. Investors are expecting the US data today as it may impact the currency pair’s movement. Analysts feel that the euro may have a bumpy start to the year as Merkel and Sarkozy are set to meet on January 9th, and Germany and France are to host a bond sale later this week.
GBP/USD: Opened at 1.5493 and traded higher to 1.5540 yesterday before ending the day back down at 1.5465. The euro debt crisis woes continue to loom over the sterling as it kept it at 1.5465 for the remainder of the US session. It opened higher this morning at 1.5510 and found strength in investors’ appetite for risk due to the stronger Asian stock markets. GBP/USD traded as high as 1.5575, but is currently back at 1.5555. Market optimism may continue to push the currency pair higher, but investors will be paying close attention to the UK Manufacturing PMI data that is expected at 09:30 GMT this morning.
USD/JPY: Because of the market holiday in Japan yesterday and today, markets remain quite thin for the yen. USD/JPY opened at 76.88 on Monday morning and started year by trading higher reaching 77.15. It wasn’t long before the dollar lost its strength to the yen and sank back to the open of the day. It traded a tight 10 pip range above the open for the remainder of the European and US session and opened in Asia this morning at exactly the same open as the day before at 76.88. Due to the market optimism at the start of the year, equity markets in Asia have started trading on a positive note which has led to a rise in investors’ appetite for risk. As a result the yen is strengthening against the dollar as the currency pair trades lower at 76.73. Investors will be waiting for the US data to be announced later today, but again, with the bank holiday in Japan today markets may remain thin.
USD/CHF: Traded at 0.9379 when markets opened on Monday morning. The Swiss franc initially lost ground against the dollar as USD/CHF tracked up to 0.9410 in the Asian session; however it dropped 60 pips down to 0.9350 just as the European markets were about to open. It managed to climb back above the open of the day in the US session reaching 0.9400 where it traded sideways and ended the session. It opened this morning at 0.9396 and has been trading lower at 0.9375 due to the rise in risk appetite. As with the other major currency pairs, investors will be focused on the US data scheduled for today as well as the bond sale for German and French bonds on Wednesday and Thursday.
Commodities
Oil:
Opened at 99.77 on the 30th of Dec 2011 and ended the year lower at 98.87 as the euro zone debt crisis concerns led investors to believe that the economic growth would begin to lag if the crisis is not resolved soon. It opened this morning higher at 100.21 due to the increase in risk appetite and investors optimism at the start of the year. China’s rise in manufacturing activity also contributed to the higher oil prices as this lifted hopes for a rise in oil demand. Analysts also fear any disruptions in the supply of oil as tension between the West and Iran continue to escalate. Oil prices continue to climb, currently trading at 100.75. The outcome from the US data later today is likely to impact crude oil.
Gold: Managed to regain some of its strength on Friday as it opened at 1545 and reached a high of 1573 for the day. It ended the US session slightly lower at 1560, but opened higher this morning at 1568 and has continued to surge on market optimism to 1590. The rise was also attributed to the positive rise in China’s higher PMI data. The euro zone debt crisis is still playing on investors’ minds and could possibly hold the precious metal back from rallying further.