Holiday Trading

Holiday Trading is Officially Here

Holiday trading conditions have officially arrived this morning as market liquidity has all but dried up and called it a year.  Trading conditions are thinning exponentially as we approach Christmas as most trading desks around the world will likely be less than half staffed from today until January.  While this means that liquidity will definitely be at a premium, it doesn’t inherently mean that volatility will be as well, as the reduced trading volumes over the holidays have been known to at least contribute, if not create, choppy markets that can oscillate wildly with the proper incentives.
It is safe to say that there are no such incentives at work today however, with global equities being largely mixed and markets being somewhat lethargic in general.  Asia traded with an offered tone in both Hong Kong and Shanghai with Tokyo closed while Europe’s major bourses have been moderately positive as we push towards their close.  Crude oil is continuing to ride yesterday’s bid tone and is now exchanging hands with a $90 handle.  Gold and commodities are both slightly lower with the CRB index of commodity prices shedding close to 0.3% in value overnight while the Greenback has been slightly in vogue as well in gaining a touch more than 0.1% on a trade-weighted basis. At present, the dollar seems poised for its eighth consecutive daily gain and its sixth gain in the past seven weeks since finding a bottom in early November.  While risk appetite has been largely mixed given the uneven performance in equities and commodities, the flight to safety play has been uneven as well with the Swissy yielding territory while the yen traded higher without any supporting local data of significance in either market.

Heavy North American Data Calendar
USDCAD is trading with a slightly offered tone for the third day in a row, retracing nearly 50% from the two-cent rally that was brought to bear on Friday/Monday.  The market seems poised for a break in one direction or another after recently posting a double top at 1.0210 to counter the triple bottom already in place at 0.9980.  That said, we may very well have to wait until the tail end of next week, if not the New Year, to see the volumes required to affirm any break in the daily price action.
While liquidity is thin, there is no shortage of data for traders to digest on the day with a heavy data calendar stateside.  Canadian GDP for November came in slightly below the market’s 0.3% expectations with a reading of 0.2%, though economic activity did tick up from October’s 0.1% decline.  US durable goods orders came in slightly lower than expected as well, though this was largely due to the highly volatile transportation sector as opposed to underlying weakness in the larger economy.  Also on the slightly disappointing side of the day’s ledger, personal spending came in below the market’s consensus with a miss of 0.1%.  Weekly initial jobless claims, core prices and personal income came in on expectations however, thereby softening the blow of some slightly weaker than expected economic data in North America on the day.
By Mark Frey, Regional Director for Corporate Canada
Western Union Business Solutions