FX update
The dollar rallied today against both GBP and the EURO after slightly better than expected November Existing Home Sales. Thin market conditions exacerbated the move against the EURO and GBP with charts on both pair now indicating an “outside day, down”. Should today’s low be broken on 2 January, we might expect a good bout of dollar buying. USD/JPY broke back down through 112 on yen carry unwind and end of year squaring up; this move also extended in thin markets. EUR/JPY carry trades are also being unwound to the tune of 240 pips in today’s session. EUR/GBP stayed within Friday’s big range, selling off the somewhat better than expected data but spent the rest of the day retracing those losses to “close” near .7350. USD/CNY, at 7.2971, was off 70 pips today.