European Session Summary
Trading conditions remained thin on Wednesday, Typically, the weeks leading up to and after Christmas are slow, as many trading desks around the world are closed. Higher yielding currencies had outperformed headed into the North American trading session, but the Euro continued to lag.
The short-term Italian bond auction went off without a hitch this morning, actually surprising most market participants to the upside. With the rate at which to borrow for 179-days cut in half, it appears that a combination of heavy European Central Bank bond buying and participation by banks helped bring down the short-term yield. Still, the key auctions to watch for take place in the medium-term portion of the yield curve, most notably the 10-year.
NZD/USD 5-min Chart: December 28, 2011
Light_Trading_Continues_Kiwi_Tops_Majors_U.S._Dollar_Lags_body_Picture_28.png, Light Trading Continues; Kiwi Tops Majors, U.S. Dollar Lags
Charts created using Strategy Trader– Prepared by Christopher Vecchio
On the news, the commodity currency block received additional bids and pushed towards session highs ahead of the New York session. The New Zealand Dollar was the top performer, up just over 0.5 percent against the U.S. Dollar, at the time this report was written. Similarly, the Canadian Dollar was particularly strong, with more saber rattling out of Iran today.
It should be noted that as this report was headed to publishing, there was odd price action observed in the European currencies, particularly the British Pound. Given thin trading conditions, any large moves should be taken with a grain of salt, though if a sell-off gathers pace, it will demand greater attention.
24-Hour Price Action
Light_Trading_Continues_Kiwi_Tops_Majors_U.S._Dollar_Lags_body_Picture_7.png, Light Trading Continues; Kiwi Tops Majors, U.S. Dollar LagsLight_Trading_Continues_Kiwi_Tops_Majors_U.S._Dollar_Lags_body_Picture_1.png, Light Trading Continues; Kiwi Tops Majors, U.S. Dollar Lags
Key Levels: 13:55 GMT
Light_Trading_Continues_Kiwi_Tops_Majors_U.S._Dollar_Lags_body_Picture_4.png, Light Trading Continues; Kiwi Tops Majors, U.S. Dollar Lags
Thus far, on Wednesday, the Dow Jones FXCM Dollar Index is slightly higher, trading at 9970.26, at the time this report was written, after opening at 9953.70. The index has traded mostly higher, with the high at 9970.26 and the low at 9930.53.
--- Written by Christopher Vecchio, Currency Analyst
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