Monday, 14 Dec 2009

Holiday Spending Will Heavily Impact Forex Market

After last week's sudden surge in the USD, the greenback appears to be correcting against its rivals in today's trading. As the holiday shopping season gets underway, traders should see a surge in a number of trading instruments.

Primary among them are Gold and Silver, which should receive a hefty amount of support from the increase in jewelry sales prior to the largest holiday shopping seasons of the year. With commodity prices rising, there may also be some modest downward pressure on the USD, but since many Americans increase their consumer spending around this time of year, the US economy may grow in strength through January and the greenback could go up as a result. This will likely depend on how people see the USD fairing in 2010.

Traders should pay attention to a number of reports this week. First are the consumer confidence reports coming out of Europe which will gauge how Europeans see their economy doing at the start of the new year. Second are the CPI and PPI numbers from the major Western countries as inflationary data has a direct relationship with consumer spending and confidence.