Filed Under:
Forex pairs in this Article » USD, EUR/USD, USD/JPY
Talking Points:

• There is a seasonality effect in markets through the start of the year as liquidity returns

• Our first full day of 2014 looks convincingly like a strong 'risk aversion' trend is building

• Three keys to a true trend are: clear risk lines; sustained risk relationships; and rising participation

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The first full trading day of 2014 seems to have given a strong signal for risk aversion. A tumble for the S&P 500 has been matched by a USDollar rally and yen cross plunge in the FX market. The volatility of the moves and 'sentiment'-bearings for the different benchmarks suggest a considerable theme is underway. Yet, conviction in such a prominent counter-trend move requires a higher level of confidence than a one-day drive - especially when we may be witnessing a market skewed by a liquidity-based seasonality effect. We look at this opening move more closely in today's Forex Strategy Video.

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