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Market Review:
Price Action Slump
In the daily market review with TheLFB trade team, Dan Cook, Snr Market Analyst at IG Markets, looks at the impact of Friday price action. Catch Dan, and TheLFB trade team on ForexTV Live.
EUR/USD – The last few hours of trading have seen the Euro cede back some of the ground gained yesterday after US President Obama unveiled plans to return to regulation that could go as far as breaking up some of the nation’s largest financial institutions. After hitting an intraday high around 1.4165 though, the Euro has once again felt some selling pressure even as the Eurozone posted some positive economic results. Industrial New Orders in the Euro Area (EA16) rose by 1.6% in November compared to a drop of 1.9% in October.
Even so, this news was not enough to keep the EUR moving higher and from the price action it appears that traders are still not willing to stick with a belief in Euro strength past the short term. Next week investors and traders will continue to monitor any developments out of Greece, as well as any additional talk from the US administration regarding bank limitations on size and trading activity.
GBP/USD – After a steady climb following the US Presidents speech on banking reform, heading into the London trading day, Sterling reversed course and once again began to drop. There was really nothing too bad as far as economic data to precipitate this drop. UK Retail Sales did miss expectations by showing only a 0.3% growth figure; however, this was much better than the decline of 0.3% posted the month prior. All in all, it looks like concern, confusion, fear, apprehension (go ahead and pick any or all of the above terms) are what is really driving the markets.
Dubai, Greece, the US Financial Sector, Employment, Housing (it is kind of sounding like a very popular REM song) are some of the major concerns and so far, the concerns are translating into Dollar strength against both the Euro and GBP.
USD/CAD – The US Dollar showed another burst of strength a few hours before the opening of the North American trading session and looks to end the week substantially higher than where it started. As the US Dollar rally got underway it was fueled even further by pretty bad Canadian Retail Sales Data. For the November 2009 period, Core Retail Sales (ex auto) came out flat at 0.0% after posting 0.3% growth the month prior.
On the broader Retail Sales a number of negative 0.3% was displayed after what had been a promising October which showed 1.0% growth. Next week should be pretty interesting from a global events perspective and we will likely have days of elation followed by days of trepidation which could create some very volatile markets