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FOREX News: Dollar Advance to Start the Year Less Potent tha

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FOREX News: Dollar Advance to Start the Year Less Potent tha

Postby fxcapitalvia » Fri Jan 03, 2014 11:10 am

Dollar Advance to Start the Year Less Potent than Equity Tumble
Though dollar bulls’ enthusiasm fell far short of the level of fear bubbling up through this past session’s US equity selloff, the currency still managed its best performance since the Fed Tapered on December 18. The greenback’s unprecedented depth positions it well for any heavy drawdowns in sentiment, but such an auspicious development for risk trends would be difficult to muster this week. While we are awaiting the return of liquidity to reengage underlying market currents following the disruption of the 2013 year-end drain, the ranks remain historically thin until the first full week of trading. That means we are still lacking the most crucial element of genuine trend development: participation.

While much of the focus went to the GBPUSD’s 113-pip tumble this past session, the sterling’s individual performance deserves some reflection. The currency dropped against all but the Swiss franc Thursday – a universal change in direction from the impressive charge the pound mounted over the previous six months. Though not an immediate catalyst, it is worth noting the December manufacturing activity report’s influence.
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