USD
The last trading day of the year saw the Dollar rise in very thin Forex trading session, on news that Initial Jobless Claims during the last week of December unexpectedly dropped, reaching the lowest level in over a year.
The Dollar responded to the report by quickly erasing losses against several major currencies, while the ICE Dollar Futures Index, a non-traded health indicator for the Greenback, ended the month up 4%, its biggest monthly gain since the beginning of 2009.
Overall, the Dollar was down just over 4% for the year against the basket of six currencies that the ICE index measures the Dollar against.
Many analysts have attributed the strength of the Dollar in December to position squaring and short coverings rather than to a spate of positive economic data.
As the 2010 trading session begins, it should take a few weeks to more accurately define the Dollar’s direction after funds and institutions use the start of the year to lock in long-term holdings.
The Dollar begins this new decade against the Euro at 1.4322, against the Japanese Yen at 93 even, versus the British Pound Sterling at 1.6168, against the Canadian Dollar at 1.0517, versus the Swiss Franc at 1.0341 and against the Australian Dollar at .897.
EUR
The Euro ended the Year on a sour note as investors continue to punish the multi-national single currency in light of weakness seen with some of its members.
The Eurozone is a complex economic entity in which 27 different economies share one primary currency.
As highlighted in the past few weeks, the stability of the currency is dependent on the overall strength of the member states – and with some like Greece and Spain and select Eastern European countries displaying credit problems, the overall Euro entity is threatened.
Analysts point to the recent credit downgrade of Greece by all three major rating agencies as the most recent blotch on the books of the Euro which is muting the response to growth signs in Germany and France, the two largest and seemingly most vital economies within the Eurozone.
The Euro ended 2009 and will begin 2010 trading at 133.2 to the Japanese Yen, off a downtrend to the British Pound holding at .8856, against the Canadian Dollar to 1.5063, versus the Australian Dollar to 1.5959, and against the Swiss Franc to 1.4811.
The week ahead….
This week will start off slow as traders return from extended holiday breaks but will pick up towards the end of the week.
FX Traders will be focused on the Dollar starting Wednesday with the ADP Employment Change – which will give an indication as to what the end of the year employment situation was and set the tone for Thursday’s initial jobless claims report.
Friday will show the Employment situation in the Eurozone with the Unemployment Rate report, while traders will likely see the results of the European holiday shopping season with the Retail Sales report.
