Forex trading US market closed EURUSD trading

FX markets were unimpressive in the Asian session. With the US out on holiday, today's trading session is expect to also be uneventful. Coming off last week, weaker US data, China's reserve requirement increase, rumors of Chancellor Merkel's resignation, unsatisfactory answered questions surrounding Greece and JP Morgan's better earnings, but cautiously outlook had traders understandably nervous. The EURUSD finally found a temporary bottom around 1.4335, while the USDJPY ranged between 90.60 and 91.30. Treasury yields dropped along the curve, with the 2y down to 0.86%. Perhaps the highlight of Asian trading was the noticeable response to Evans-Pritchard piece in the Telegraph, which paused the EURUSD lower. The article suggested that the ECB was preparing legal grounds and framework for the secession from the monetary union. The article lacked any hard evidence but relied mainly on the author's strong reputation. However, given the stress Greece is under, policy members must be contemplating "what if " scenarios…I know we are. In New Zealand, December residential house price index disappointed at m/m -0.9% vs. 0.2% prior. Markets will now be watching CPI on Wednesday and weak import and food price data have increase the possibly of a downward surprise. The RBNZ is expected a 0.2% q/q fall, so anything lower will reinforce the view that rates will stay on hold till mid 2010. The NZDUSD failed to break 0.7450 resistance last week and further removal of yield support will put addition pressure on the kiwi. Other key data points this week will be from China, with Retail sales, GDP and IP are all expected to remain elevated. While the stronger data will be good from the global economic cycle, too much growth and inflation might make Chinese policy makers nervous, prompting an acceleration of their tightening cycle. As we have seen last week, it would be highly negative for risk collated trades (especially commodity currencies).

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