Volatile Day leads to another Day of Volatility

Yesterday, we saw the waxing and waning of the dollar strength all through the day which pushed the various currency pairs this way and that. Day traders would have loved these kind of moves while it would have been a very difficult day for positional traders to make any kind of decision about the underlying trends during the course of the day.

Most of these moves could probably have been due to the fact that large orders might be going through as the traders and the bankers have returned from their holidays and they have started opening positions in anticipation of the larger trends to prevail. They may also be establishing positions in line with the expectations for the upcoming economic news from the different parts of the world. But the overall theme over the past 24 hours has been the weakness in the dollar which has helped to push the euro towards 1.06 and we have also seen some yen strength which has caused the USDJPY pair to plummet towards 115 but they have stabilised as of this morning.

Looking ahead to today, we have the NFP report which generally sets the tone for the rest of the month. This month, this report will be looked forward to as the market would like to see some strong data which would support the case for quicker hikes ahead. So, if the data comes out strong, expect the dollar strength to return while a failure in the data would cause the dollar weakness to continue even more. Traders are advised to stay on the sidelines till the dust settles down so that they will be able to see the underlying trend after all the noise and then start establishing their positions. Good luck for what promises to be a highly volatile day ahead.

 
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