Monday, 3 Jan 2011

Silver and Crude Oil Make New Highs

The dollar and commodities kicked off the new year with a bang, trading higher versus the majors. But as the day moved on many of the dollar's gains eroded as illiquid market conditions are apparent with Japanese and European banks are closed for a holiday. Liquidity should improve with the opening of the US session.

In the European trading session the greenback shed some of its gains that were made during the Asian session. The dollar was heavily bought in the early morning hours of today as this is in stark contrast to how the dollar finished out the year.

The USD/CHF closed out the year at is yearly low. This was similar to the USD/JPY. Both pairs were sold heavily in the final two weeks of trading.

In illiquid trading, the EUR/USD was trading down at 1.3315 after opening the day at 1.3384. The GBP/USD was down sharply at 1.5643 following an opening price of 1.5610. The USD/CHF was up at 0.9361 from 0.9343, and the USD/JPY was up sharply at 81.40 from 81.13.

Commodities were stronger as well, continuing their push higher that was characteristic of year end trading. Spot crude oil prices are trading at their highest price since September 2008 at $92.11. Spot silver was trading at a high as well, pushing as high as $31.11 after opening the day at $30.83. Spot gold prices were flat at $1419.

This afternoon traders will be following the release of the US ISM Manufacturing PMI. Market expectations are for a rise to 57.0 from 56.6. Strong manufacturing data from the US may help to extend the dollar's gains into the US session as liquidity should improve with the opening of the US session.

EUR/USD resistance and support come in at Friday's high of 1.3420 and the 20-day moving average line at 1.3220.