traders hoping for a quiet market ahead of the extended holiday weekend were sorely disappointed to see the Dollar Index post its largest drop in over a month. What likely surprised the majority of traders was that such a decline occurred on no new US news, with relentless stop-hunting providing a jump in volatility. Market makers seemingly took advantage of low liquidity on the holiday-shortened week to drive dollar-long position off of their books. This notably sent currency pairs such as the EURUSD and GBPUSD beyond key resistance levels and the Dollar Index to two-month lows.


Pronounced dollar declines left many traders questioning whether this was the start of a larger-scale shift against previous Greenback resilience. Looking to other markets for clues, we see that specific US securities did not follow in the currency’s footsteps—leaving vague implications for the future of dollar movements. On the one hand, muted bond and interest rate futures action suggests that traders see little reason to change outlook on the US economy. On the other hand, the dollar’s pronounced weakness on purely technical trades suggests that bears may dominate rolling forward. Proprietary volume data suggests that the former is the common perception, with speculators taking very one-sided US dollar long positions in expectation of a retrace. Regardless, traders will likely need to wait until Monday for an answer to this question, as trade is likely to prove uneventful through extended holiday weekends in the US and Japan.  


US equities provided little of the excitement seen in currency markets on the day, as the S&P 500 finished barely changed at 0.1 percent higher through the close. Earlier dips in the broader market were quickly erased as falling oil prices buoyed sentiment on corporate stocks. Leading the modest rally, US chemical conglomerate DuPont added 57 cents to $48.60 on falling crude costs. Regardless, analysts claim that more pronounced gains were limited on thin trade ahead of the US Thanksgiving holiday.


Bond prices were likewise barely moved through their early close. The generic 10-year bond added three basis points to 100 and 17/32, sending yields one basis point lower to 4.56 percent.