Once again, Asia suffers through another holiday week sleep fest with an early session bombardment of the Euro the lone notable event of the day. The big move of the week so far was the drop in risk we saw earlier today in New York trading hours, Asia saw a bit of follow through though as traders took advantage of thinned markets and made a full assault on a well noted options barrier at the 100.00 level in the EUR/JPY. The slide from 100.70 to 100.30 helped spark a drop in risk across the board. The EUR/USD slipped from 1.2920 to under 1.2890 while the AUD/USD touched 1.0040 lows after a start nearer to 1.0080. The moves were fleeting however, as the affected risk currencies rebounded nicely to fresh session highs as the morning wore on.
The week between Christmas and the New Year has traditionally been a harrowing one in currencies, with thin markets at the mercy of big funds closing out positions as well as funds facilitating year end redemptions. This has been a big driver of late in the precious metal markets as Gold and Silver continue to lose luster in December. Gold, which at times has seemed invincible, has dropped to the tune of almost $200 this month alone. Elsewhere, the yen saw some strengthening as the crosses dove lower on the EUR/JPY move; USD/JPY even got in on the activity and slipped about 20 pips on the day to 77.75.
Looking ahead, markets are focused on the upcoming Italian 10 year bond auction which is slatted to begin at 9:00GMT. This will prove to be another pivotal barometer on the overall health of the Euro and the economy of Italy. Also of note would be keeping an eye on the current verbal sparring between the U.S. and Iran as the oil rich nation continues to saber rattle and threaten a closure of the Persian Gulf while the U.S. promises that they will not let such a thing happen on their watch. Certainly a situation that will merit possible moves in risk, energy markets and gold.
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