First Trading Day Of The Year For Some, But Not All - With markets closed in Tokyo and London today, market players are taking advantage of thin holiday liquidity to create some volatility and earn some quick easy money. As you can see from last week's post, the Euro was down 6.73% for 2010, its biggest annual drop since 2005, thanks to the European sovereign debt crisis. Last week we saw a lot of short covering in the Euro as the 200-day moving average just below 1.31 has offered strong support. In term of the crisis, nothing has changed there but the equity markets have been rising cause the USD to retreat from its 2 months advance. I can see the rally in the equity markets continuing for at least another couple weeks, before focus shifts back to the Euro. The key drivers this week will be Friday's U.S. nonfarm payrolls, which are seen rising by 126,000 in December, and U.S. Federal Reserve Chairman Ben Bernanke's congressional testimony. Today news that the Institute of Supply Management’s index on U.S. manufacturing showed an improvement for December help spur the USD higher against the Euro. In Canada, the CAD continues to hold on to its gains against the USD due to continued improvement in the U.S. economy and firmer oil prices.
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