Forex Strategy Video: How the Markets Open New Years
• There is a seasonality effect in markets through the start of the year as liquidity returns
• Our first full day of 2014 looks convincingly like a strong 'risk aversion' trend is building
• Three keys to a true trend are: clear risk lines; sustained risk relationships; and rising participation
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The first full trading day of 2014 seems to have given a strong signal for risk aversion. A tumble for the S&P 500 has been matched by a USDollar rally and yen cross plunge in the FX market. The volatility of the moves and 'sentiment'-bearings for the different benchmarks suggest a considerable theme is underway. Yet, conviction in such a prominent counter-trend move requires a higher level of confidence than a one-day drive - especially when we may be witnessing a market skewed by a liquidity-based seasonality effect. We look at this opening move more closely in today's Forex Strategy Video.
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.