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Currency Trading Update

Tuesday proved to be a rough trading day for contestant number 1, as his currency trading portfolio balance lost over $85,000 in value from the day prior due to a handful of long EUR/USD positions that went against him. This helped to narrow the margin between contestant number 1 and contestants number 2 and 3, despite the fact that the latter actually lost money trading EUR/USD as well. In fact, out of the top 5 in the leader board, only contestants 4 and 5 made money between Monday and Tuesday, helping them to move up in the rankings.

Trading should remain pretty quiet through the end of the week as most of the world's financial markets will be closed for the New Year's holiday on January 1. There are no indicators due for release on Thursday, but there are a few that may be worth watching on Friday:

Asian Trading Session
*No key indicators due to be released

European Trading Session
01/02, 04:30 ET
Bank of England Credit Conditions Survey (Q4) - The BOE's quarterly survey of credit conditions in the UK will help to give a more in-depth look at how the financial markets are faring. Most likely, the report will indicate tighter credit conditions, but the degree to which lending and borrowing has been constricted may dictate what the BOE does when they announce rates on January 8. As it stands, a Bloomberg News poll shows that economists are betting on a 50bp cut to the Bank Rate to 1.50%. However, if this credit survey proves to be disappointing, the British pound could fall as the markets price in a more aggressive reduction. On the other hand, indications that the BOE may leave rates unchanged could lead the currency higher.

US Trading Session
01/02, 10:00 ET
ISM Manufacturing (DEC) - The Institute for Supply Management’s (ISM) index of manufacturing conditions during December may fall to the lowest levels since 1982, while the record low of 29.4 reached in May 1980 looms close below. There is little reason to believe this index reading will be anything but disappointing given broad declines in both domestic and foreign demand, along with mounting job losses in the manufacturing sector. However, seeing as though the Federal Reserve has already cut interest rates to record lows, a weak result may not shake up the US dollar. Instead, a stronger-than-forecasted result could have a greater impact and lead the greenback higher.

Happy New Year!

Terri Belkas
Currency Strategist
Forex Capital Markets LLC

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