Recently, the volatility in Forex has been centered in the Yen and to a similar extent in the Euro. As a result, other currencies have been receiving very little attention. That is particularly true about the commodity currencies, which are languishing to a certain degree. All of them have been moving in relatively tight ranges, consolidating. No surprise, really, without significant news to influence the market players and the media, focus shifted elsewhere.
That is likely to change in the next two days, especially in respect to the Australian Dollar. In a few hours, employment numbers for December are scheduled for a release and they are almost always big movers, especially in case of surprising results. Analysts predict the Unemployment Rate to increase to 5.4% from 5.2%, even though the Employment Change is set to show a gain of 2.3K. This confusion could lead to elevated volatility. On Friday, the Aussie should remain sensitive to the GDP data from China. By extension, the New Zealand Dollar is likely to start moving, too and to a lesser degree the Canadian Dollar. In addition, with this news coming out in early hours on both days, they could set the tone for the rest of the week for all currencies. Regardless of details, these events are worth watching.
Yesterday I mentioned another possible trade in the EUR-JPY, if the price moves under the support of 117.58. The move indeed happened, sooner than expected. However, this next leg of selloff did not reach my objective of 116.00. It bounced from 116.48 but few hours later attempted another bearish run. Unfortunately, for me, it was a failure, no new low was recorded. I decided to close the trade and pocket some profits. Clearly, after a selloff of 350 pips, the EUR-JPY wants to consolidate. We have to wait and see what develops before deciding on another trade. I think we will see more downside, perhaps to as low as 112 or so, rather than new highs, but that is only opinion and could change.
Mike K.