Traders who want to pursue speculative positions this week need to understand that market conditions will be extremely thin. While the USD has certainly taken on a 'softer' dimension and financial institutions are demonstrating solid risk appetite, this week's trading could produce lackluster choppy conditions.
Economic data will be light this week due to the ongoing Christmas celebrations, and the New Year's holiday which will come next Monday. Forex markets can produce trading opportunities in the near-term for folks who want to wager on changes of direction, but some of the trajectories may be dubious and reversals could loom. Entry orders are urged for participants because spreads between bids and asks will likely be wide.
Gold remains within its higher price boundaries as the USD produces weakness, but betting on the precious metal this week could also be dangerous. Gold has certainly been trending upwards, but short-term speculative positions by large players could make the commodity agitated the next handful of days if they try to take advantage of light volumes. Day traders without significant bankrolls should be careful.
While economic data will be released, it is doubtful how much impact the reports will have on the broad markets. Active traders should monitor the coming statistics, but they should stay 'more' alert for possible outside influences which could shake confidence and shadow the rather optimistic behavioral sentiment which is currently being demonstrated.
News via international shipping should be given attention as the Houthis and Iran rattle their swords. While experienced traders will not be flustered by noise, the potential for escalating violence should be given attention.
Tuesday, 26th of December, Japan Core CPI via the BoJ - inflation data from Japan has been published today and the Consumer Price Index came in below expectations. The USD/JPY remains on a downwards trajectory and should be given consideration.
Wednesday, 27th of December, U.S Richmond Manufacturing Index - this report being 'highlighted' shows the minimal amount of data being published this week. A decline versus the previous month's negative outcome is expected. The likelihood that significant trading will be ignited via the results of this publication is almost nil.
Thursday, 28th of December, U.S Pending Home Sales - the data is expected to show a gain of 1.1%. However, it is next month's report which will get more attention, this as investors look to see if the Fed's soft monetary policy stance which was heard in mid-December, helps boost the housing market in the coming weeks. This immediate report however is likely to be met with a rather quiet reaction.
Friday, 29th of December, U.K Nationwide Home Price Index - this economic report like yesterday's U.S housing numbers is destined to have little influence on short-term trading results. The GBP/USD will not be affected by this report in any great manner.
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