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Volatility on the Last Trading Day of 2011

By:
FX Empire Editorial Board
Updated: Mar 5, 2019, 13:23 UTC

Volumes continue to be very low on the last trading day of 2011, therefore movements seem to be exaggerated. Although economic data will be absent today

Volatility on the Last Trading Day of 2011

Volumes continue to be very low on the last trading day of 2011, therefore movements seem to be exaggerated. Although economic data will be absent today from Europe andU.S., volatility will persist within the broad markets.

Concern over Europe’s two-years debt crisis which could drag the global economy into recession still persist, yet positive data from theUSyesterday signaled the world’s largest economy is withstanding againstEurope’s debt crisis.

The Chicago PMI reached to 62.5 in Dec. from 61.0 expected while the pending home sales rose by 7.3% in Nov. from 1.5% expected, indicating that the US economy seems to be firmer than previously expected.

While markets are believed to continue be unstable today and first few weeks of 2012, mainly being affected byEurope’s debt crisis, the slowing Chinese economy and the unstable outlook for global recovery.

In Asia, stocks closed with gain the last trading day of 2011 on the upbeatUSdata andChina’s manufacturing contraction in Dec. which reinforced the need for policy makers to implement pro-growth policies.

Yet MSCI Asia Pacific Index was down 18% in 2011, the first yearly drop since 2008. All major indexes in Asia fell in 2011, with Nikkei 225 loosing 17%, S&P/ASX 200 falling 14.5% andChina’s CSI 300 Index falling 21.7%.

Risk aversion was high in 2011, mainly due to worries fromEurope’s debt crisis which could drag the global economy into recession, while demand on the safe haven USD and JPY expanded considerably.

In Europe stocks are inching higher on the last trading day of 2011, yet they are heading for their first annual drop since 2008 of almost 12% due to the spreading debt crisis which started withGreecethen reached toItalyandSpain.

The support to the European stocks was given today by the U.S. data, yet worried over the region’s outlook persist as Italy’s bond yields continued to be high even after yesterday’s bond auction.

DAX rose today 0.35% and CAC 40 rose 0.28%, yet the FTSE 100 fell 0.18%. Currencies also move in divergence, with the euro falling trading as of this writing around the 1.2940, while the pound inched higher trading around 1.5435.

The USD is moving in a tight range with some bullish momentum around the 80.35, the yen is strengthening trading around the 77.45 level, while AUD is slightly stronger trading around the 1.0165.

Commodities are stronger today where gold is trading around the $1571.60 level, while crude oil is moving in a tight range around the $100.00 level on fears from Iran’s threat to halt oil shipments.

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