Position squaring is the name of the game

More Ken Veksler, 9 hours ago16 December 2011 T’was the week before Christmas and markets remain nervous. Not a major shock to the system given the type of year it has been, not to mention the last few months. Positioning squaring remains the name of the game and especially today ahead of what will no doubt be the last real (if you can even call it that) trading week of 2011.
US bourses closed in the black for the time this week overnight and gave the Asian indices a lead also. Consolidation rather than substantiated growth or positive sentiment can be directly attributed to the move, and likewise in the commodity complex. This gave the higher beta crosses a small boost as the DXY also sought consolidation.
My advice is not to confuse last night with everyone’s wish list item if a Christmas rally. The boat has well and truly sailed, assuming it ever even truly hit the water. The day holds little if anything of real value by way of data releases and as mentioned above position squaring in very thin markets will lead to flows in both directions (erratic as they may prove to be).
Overnight a story of the major Australian banks being issued with a one-week deadline to stress test their essentially European exposure under a “the world explodes” worst case scenario failed to dampen enthusiasm for AUD purchases, but again here it’s important to underline that this move was more a function of USD consolidation rather than inherent AUD strength.
Levels on the day aren’t dissimilar to those of yesterday, in that the EURUSD still has to overcome the 1.3050 level, with stops just above that which could see us run briefly into around the 1.3130 resistance, which will again provide a chance for rally faders to enter the market. While the downside remains as open as ever.
The AUDUSD also looks for 1.0030/50 for ultimate resistance before continuing its road lower with 0.9750 still firmly in sight.
The Cable still hangs in there and currently trades in and around the 1.5550 pivot level established over the last few weeks of price action. This cross looks equally fragile, but is less likely to drop or even move at all violently for that matter.
And finally USDCAD may well test and take a deep breath back towards the 1.0250 breakout level before reloading for another run back towards that 1.0470/0500 level.
US CPI might be the only thing that gives the market a small shudder, but in truth also quite unlikely.
As always on a Friday and never more so than now, I suggest you don’t ruin your weekend with a cheap punt.Helmets as always, firmly attached.(Twitter