US Dollar Pulls Back on Half-Day of Trading

The US Dollar finished the day lower against the Euro and other key forex counterparts as recently impressive US Dollar appreciation gave way to a noteworthy short-term pullback. Consistent with our recent calls for a near-term correction on exceedingly one-sided forex sentiment, the Greenback gave back ground through relatively illiquid holiday trading. The US economic calendar provided some early-morning support and slowed earlier losses. US Durable Goods orders showed healthy growth in business capital expenditures for the month of November, while Initial Jobless Claims data showed that fresh unemployment insurance claims fell to their lowest levels in 15 months.

Combined with last month’s impressive US Non-farm Payrolls results, we are beginning to see more concrete signs of turnaround in the domestic labor market. Suffice it to say, December’s NFP results could have a fairly substantial effect on US fundamental forecasts. In the shorter-term, traders should be wary of very limited liquidity and manage position risk accordingly. Though markets seldom post big moves through the holidays, thin liquidity can make for exaggerated price action on scant volume.