Thin trading expected as the Christmas celebrations continue
Thin trading will be experienced today as people around the world are on their Christmas break. Many markets including Australia, United Kingdom and Canada will remain closed today. This comes after the markets in the United States saw major declines on Monday this week. Traders were concerned about the current issue of rising interest rates, dysfunction in Washington and trade. These declines have made this December the worst for the markets in decades.
The government shutdown in the United States continued as most policymakers left Washington for the holidays. With most legislators away, there is a high likelihood that the shutdown will continue for weeks. Democrats are not incentivized to do anything because on 3 January, they will retake the house of representatives. Republicans will retain the senate but will not have the required 60 votes required to vote on any point.
The Bank of Japan released the minutes for the meeting held in October. The minutes showed that the bank’s officials were divided on the impacts of the current easy money policy. Of key importance was the division surrounding the bank’s policy of letting bond yields to move flexibly around the zero percent target. One official said that the bank should not rule out widening the range in which bonds could move. Another member warned that with inflation still at low levels, allowing the free movement of bonds could cast doubt on the bank’s commitment of reaching its inflation target.
The EUR\USD pair was little moved in the Asian session as most traders stayed away from the market. The pair is now trading at the 1.1405 level, which is higher than this month’s 1.1270. The RSI has moved to the 50 level while the price is along the 14-day Simple moving average. The pair will likely remain along these levels. The upward trend is likely to continue as the US shutdown continues.
The GBP\USD pair declined slightly in the overnight session. Today, the UK market will remain closed as most policymakers remain out of London. Therefore, focus will be on the United States, where Donald Trump remains in Washington. On the hourly chart, the current price of 1.2700 is slightly below the lower band of the Bollinger Bands while the Average True Range (ATR) has continued to move up.
The AUD\JPY pair continued the declines after the BOJ released the minutes for the October meeting. The pair is now trading at the 77.72 level, which is the lowest it has been since December 2016. The relative strength index has fallen below the oversold level while the price is along the lower band of the Bollinger Bands. The momentum indicator too has fallen below the 100 mark. The downward trend will likely continue though this could change as the new year starts.