Volatile End to 2008 in Thin Trading

Daily Forex Fundamentals |  Written by CMS Forex |  Dec 31 08 23:00 GMT |

US Jobless Claims Fall Sharply, But Holidays Skews Data The number of Americans filing first-time claims for unemployment benefits fell sharply last week, skewed by the shortened Christmas workweek. Claims dropped by 94K to 492K, which was the lowest level in 2 months. However, the number of total people collecting unemployment rose to the highest level since 1982. Therefore though the headline figure seems great, its fool's gold. The pace of firings has stepped up in the 4th quarter and it's harder for those that have been laid off to find new jobs. With many retailers forced to close their doors following one of the worst shopping seasons in decades, and many more stores on the brink of bankruptcy and shutdown, the underlying labor market remains terrible.  EUR/USD - Euro Falls on Last Trading Day of 2008 After retracing part of the fall on Monday in yesterday' session today saw the Euro-Dollar pair slide sharply overnight, culminating in an almost 300 pip move that found support at 1.3850. The Euro fell across the board, as we will highlight as traders squared their positions on the last day of trading in 2008. EUR/JPY - Yen Gains vs Euro Before Turning Choppy in NY Session The Euro-Yen, in a rather similar move to the Euro-Dollar slid about 225 pips, falling to levels seen last week. The pair then recovered about 130 pips of that fall and traded choppy in NY trading.    EUR/GBP - Euro Slides From Record High vs Pound The Euro also gave its recent gains against the Pound. After retesting its new all time high yesterday, the pair took a big 300 pip slide overnight to the 0.95 area. That was the old level of resistance from last week, which has now turned to support. From the 0.95 area the pair rose back 150 pips to test an upward sloping trendline which sent the pair back down in whippy action in NY trading. GBP/USD - Pound Trades in Whippy Action The Pound-Dollar pair captured the sharp back and forth moves as well. The Dollar was climbing overnight, hit a high near 1.47 and then plummeted down to set a new 6 and a half year low at 1.4350. The pair then erased those losses to reclaim the 1.46 area. The sharp moves back and forth are evident of thin liquidity conditions as many of the big players are not in the market today. AUD/JPY - Aussie Jumps in NY Trading In a breakout from less volatile ranged trading seen recently the Aussie-Yen pair surged today in thin trading. The pair retested the resistance-turned-support level at the 62 level and sky rocketed 200 pips in NY trading. Oil prices were higher during the NY session, climbing above $40 a barrel which helped boost commodity currencies like the Australian, New Zealand and Canadian Dollars. Friday's Releases The forex market will be closed for New Year's Day but we come back on Friday with some important releases, mainly manufacturing data from Australia, Europe, UK and the US for the December period. From the UK we also releases on housing prices and mortgage approvals. Capital Market Services, L.L.C. www.cmsfx.com