Just when it looked like it could turn into a quiet close to the trading week, a jolt of volatility ripped through the markets early Friday morning. A reminder to holdout speculators that there is still serious risk in the Fiscal Cliff debates and the possibility of an 'automatic' US recession next year, news of stalled House talks sent the liquidity-deprived US equity futures collapsing. The 50 handle drop in the S&P 500 futures alone is testament to both market conditions and the concern surrounding the looming fiscal threat. Yet, despite the abrupt collapse in equities, the risk-sensitive pairs in the FX market were more controlled in their response - interesting given many of those pairings (the yen crosses particularly) are arguably more 'overbought'. In today's video, we discuss what the news and difference in reaction means for trading into the end of the week.

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