Independant Analyst: Lena Manousarides 11th November

publication date: Nov 11, 2008

US Markets Are Closed But Dollar Looks Open For More Gains…

The positive market sentiment seemed to fade away and the gains we saw printed yesterday were almost gone by this morning. Asian stocks dropped and the same happened to the European markets today. The risk aversion came back once again, after banks and companies declared losses and trader’s fear and uncertainty for the economic future resurfaced.
EUR/USD is trading on the downside once again and the slightly better than expected ZEW numbers we had this morning didn’t seem to give euro another push. Euro seems to be weak and some statements from ECB members as well as Trichet regarding further easing in December may be influencing the single currency for now. The bank said that they worry about deflation in the Euro area and therefore cutting rates might be the only way to go.
Today’s calendar is empty apart from the economic data we had out of Europe and let’s not forget that US markets are closed due to Veterans Day. The activity is already contained and traders are taking it easy today as the prospect of a closed US market does not seem lucrative for meaningful positions. However, the thin conditions might allow extreme moves as we have seen in the past and especially in such a fragile environment that anything is possible!
The fact that oil continue to drop towards $60 per barrel shows that the global recession worries are always in traders’ minds and markets are far from ready to start gaining at this point. One thing is for sure that until we see some kind of stabilization in global markets, the dollar will be the currency of choice for traders and although US economic data are really disappointing and economic conditions are deteriorating the greenback may continue to rise.
Let’s see how the rest of the day will go and how traders will react in the absence of US markets later today. The best way for traders might be to stay aside on a day that thin liquidity might be the theme and therefore markets can be unpredictable…