A liquidity ravaged market comes to grips with Christmas

More Ken Veksler, 10 hours ago14 December 2011 I’ve been saying it for a little while now and last night the proof was in the pudding or better still, the price action. After vague news from Iran regarding moving ships to block oil supply and even more staggeringly Fitch placing various Eastern European nations on negative “outlook” we saw the market gap, and I do mean gap seriously as there was a complete lack of bids for what market pundits (read monkey’s) call the “risk” trade. To cut a long story short we saw the USD run much higher against everything, with the standout losers on the European close being EUR, spot Gold, and the AUD. All of which have become very high beta (some already were).Walking in this morning post Federal Reserve Chairman Ben Bernanke’s statement we see a market devoid of enthusiasm for anything resembling normal action. Speaking of Ben, he reaffirmed the Fed’s rate path policy with only a very slight (and rather insignificant) change to the tone of the message, being a little bit more upbeat on growth and recovery prospects for the US. Overall those looking for hints of QE3 were left disappointed and this in large part aided the strength in the USD.
The day ahead has us waiting for prints of UK unemployment, CAD manufacturing sales and the CHF ZEW index. None of the above should be overly market moving and quite frankly not much else is likely to really put a shudder through the market.Levels on the majors in this market, are only that, levels. Directionally speaking its best to either stay out of this market or start using options to really get any value.In the EURUSD looking for a break of the 1.3000 level (despite option barriers sitting there) and the next stop on the road lower is 1.2930 (once stops have been cleared).There is likely to be yet another short squeeze like we saw yesterday, however the magnitude of the move shouldn’t be as great as yesterday's.The AUDUSD will track the EURUSD today as it has for some time now, but again more violently. Looking for 0.9980 to be broken and stops triggered below, taking us into 0.9830 as the next legitimate level of support.
Those long USDCAD from my comments last week should be grinning and probably staying in their longs as we look for 1.0500 in the coming days.Gold for me is the most exciting thing to watch and 1580 is now the real target as the precious yellow metal continues to sell off.Little else to add today and more during the course on Twitter (