Will the Greenback be able to party like it’s 2012? It seems like it spent the last few days of 2011 losing ground to most of its major counterparts, except for the euro. EUR/USD ended the year below the 1.3000 handle while the rest of the higher-yielding currencies enjoyed the Santa Claus rally.
Although there weren’t a lot of hard-hitting economic reports released towards the end of the year, we saw a pretty decent risk rally as Forex Gump predicted in his article about a possible Santa Claus rally. One reason that could explain this was that traders closed out their positions before 2011 came to a close. Another reason was that Italian bond auctions turned out slightly better than expected, as yields didn’t spike up too much.
Aside from that, the U.S printed a couple of better than expected economic figures just after Christmas. Pending home sales beat expectations and showed a 7.3% increase, which was a lot higher than the estimated 1.7% gain for November. Chicago PMI came in at 62.5, surpassing the consensus at 60.4.
For today, the economic calendar is as empty as my wallet after all that holiday spending. Banks are still on a holiday, which means that we could see less trading activity for the day. Better use this time to review how the major currencies fared last year or to read up on what’s in store for the markets this 2012!