The FX market seems to have a festive season – inspired hangover

Another quiet weekend as the markets got into the swing of the festive cheer and deciphered and somewhat recovered from the Friday NFP moves. In truth however the moves seen on Friday afternoon after the print were incredibly subdued certainly for an NFP number and perhaps the best indicator yet of the time of year and lack of interest in participation. China printed slightly better data, while Japan had another widening of its trade deficit. Neither however did too much to get the markets enthused.

Walking in on a Monday morning this close to the year end and with only the FOMC next week as the sole standout real potential market risk event, it’s not difficult to understand the complete lack of price action and thus overall market movement thus far. I personally wouldn’t expect it to get too much better as the week plays out. People are starting to take things off the table now and will continue in the same vein heading into the FED meeting next week. There are of course still those out there calling for tapering to be announced this year, I however am not one of those.

As far as where the market could go today, well it could go anywhere, however the reality of it is, it simply won’t. Draghi wished everyone a Merry Christmas at his press conference last week, with a knowing smile and nod, implying that’s all kids, the year is done. So…

EURUSD overall wants to keep grinding higher and while it won’t get anywhere of real note today, the upside path has interest into 1.3750 (nearly there overnight) and beyond that 1.3780. Sellers are noted at the first level with no real mention of stops. However those very same sellers will NOT be throwing the kitchen sink at it and a break above 1.3830 opens the door to a direct path to 1.4000. A bridge too far today let alone this year, however not unreasonable. On the downside, the usual suspects (levels) are at play, looking for initial support at 1.3680, stops below and more of the same into 1.3650/30.

The Cable is headed higher overall, but once again perhaps not today. It deserves to be stronger and should behave accordingly. On the day it should likely top out at 1.6430, with stops at 1.6410 needing to get done to get us there. On the downside profit takers on shaky shorts will be happy to buy Betty into 1.6350 and 1.6330.

The AUDUSD is annoying. No more, no less. I do believe however that it’s still completing the bottoming out phase and while not massively moved for now has the potential to reclaim 0.9150/70. The downside is a Rumsfeldian plethora of known known’s and those include buyers between 0.9030 and 0.9000.

And finally in terms of the USDJPY (Bill and Ben) massive option expiries today and likely almost every day this week will keep the pair pinned. Today for example has sizeable (the smallest of which is around 1bn) expiries scattered every 10 points around the 103.00 level. Basically we’re looking at 103.00, 103.10, 103.10, 103.25 etc. So can’t hope for too much movement away from these anchor levels.

Helmets on and good luck out there today.