Dollar Volatility Ahead of Christmas

Dollar Volatility Ahead of Christmas


Expectations high in spite of festive mood

The USD was lower for the second week, though it was somewhat cushioned by the new fears about the so called “fiscal cliff”. However, the coming week is generally thought to be one of the most relaxed weeks of the year as many people celebrate Christmas. In spite of the festive mood, there are some events that are likely to impact the markets.

In the preceding week US GDP growth rate for the third quarter was on the upside with a revised 3.1% from 2.7%, beating earlier forecasts for a 2.8% rise. Unemployment claims grew to 361K, but are still on optimistic grounds. Nevertheless these heartening figures may soon lose their shine until and unless an accord is reached at the very last moment, ahead of when the “fiscal cliff” deadline expires.



EUR survives in spite of threats

As the year 2012 draws to a close, there were many who had much to say about the shared currency of Europe and others who were willing to predict that the euro would meet its doom in 2012. But notwithstanding all the prediction, the euro survived somehow and it will go forward to the New Year 2013 without any fear, as the crisis that had plagued the shared currency is now withering away.

However, there is mounting concern that the economy of Europe is in real danger as some countries are facing a never-ending downturn that has generated a record level of joblessness and increasing social turmoil.



BOJ to take aggressive steps soon

The yen has been trading at the lowest level for the past few months against the USD and the euro even though there were indications that the authorities in Japan are taking drastic steps to boost the economy of the country.

It is expected that BOJ (Bank of Japan) will soon announce fresh new plans for buying more government bonds and take aggressive action for boosting the economic growth of the country as an aftermath of the general elections.

The BOJ indicated last Thursday that it is increasing its proposal to purchase treasury bills and government bonds by 10 trillion yen or about $119 billion. The newest addition would take the total to a whopping 101 trillion yen and is designed at stimulating the slow growth of the third largest economy in the world.

BOJ is also offering limitless loans to banks in the country which may go a long way to boost domestic demand and encourage lending.



Crude oil bullish

Last week the price of crude oil was bullish as it fell below the $90.00 level. The $90.00 level continues to be major resistance. In view of this, it is felt that the long term trader is going to struggle with a decent trade set up in the near-term.

In spite of everything, crude is heading into the lowest period of the year. The coming weeks are going to be very crucial, and consequently the moves could be very unpredictable.