Currency Pair Overview Preparing For The End Of Year

Overall, the currency market is heading into the last day of year. 2008 was characterized by large swings in the currency market, driven by risk aversion and interest yield differentials. The market sold the dollar in a frenzy, making the dollar index touch a new record low, and then bought the dollar to reach a multi-year high against most of the other major currencies. At the end of the year the dollar had some record gains against the aussie and the cad, which fell in the last months, the most on record. However, the real winner of 2008 is clearly the yen, which strengthened against every other major in the wake of risk aversion. 

The Euro (EUR/USD) had a 100 pip range in overnight trading, but overall the pair was unable to pull any decent sustained moves. Furthermore, the euro just moved along the neutral pivot point, searching for a direction to trade in. The euro finishes 2008 shedding around 500 pips, or less than 5%.

The Pound (GBP/USD) tested the 1.44 area, again, in the early Asian session, but the pair lacked the momentum to break lower. Currently, the pair is trading near the neutral pivot point (1.4455), waiting for a direction to trade. This year, the pound declined a strong number of pips against the dollar and fell to a record low against the euro.

The Aussie (AUD/USD) continued to trade side-ways during the overnight sessions, extending the channel seen one day earlier. The Australian dollar also fell the most on record against the dollar and against the yen. The AUD/USD fell 20%, while the Aud/Yen fell a whopping 40% in 2008.

The Cad (USD/CAD) was the pair that moved the most in the overnight session. The pair rose in the Asian session 100 pips, touching the neutral pivot point (1.2210), but then fell back to the U.S. session closing price. This year, the Canadian dollar fell a little more than 20% against the dollar, also the most on record.

The Swissy (USD/CHF) traded alongside the neutral pivot point in the overnight session. The pair's trading range was 60 pips, as both the Asian and the European trading sessions were relatively calm. Seen as a low yielding pair, the swissy strengthened this year as risk loomed in the financial markets. The swissy finishes the year some 700 pips lower, or almost 7% lower.

The Yen (Usd/Yen) moved very little during the overnight session, in a 40 pips channel. The support is formed by the 90.00 level, where the pair had also bottomed one day earlier, while the resistance area is formed by the neutral pivot point (90.40). In 2008, the dollar dropped the most on record against the yen since 1987.