The overnight session was very quiet in the currency market. The major pairs traded range bound, while the pound traded in a very small range, even though the market expected the BoE Monetary Meeting Minutes to spark some activity since it is a report that usually creates volatility. Ahead, the market is expected to continue trading on thin momentum, waiting to see if the upcoming U.S. reports spark some near-term trends.

Equity Futures: Dow +36.00. S&P +3.50. NASDAQ +8.25. Japanese Nikkei +10.00. German Dax +13.00.

European Trade: Wednesday marks the third consecutive day in which the European markets continue to rise. The S&P futures also advanced overnight, as investor consider that the global economy is in a strong recovery phase.

U.S. Trade: Equity investors took a day off in Tuesday trade, with the major indexes trading flat throughout day. However, this was not the case in the other markets, especially in Treasuries, and to some extent, in currencies and commodities.

Since the day started, the S&P futures had a range of only 6 points, one of the lowest of the last few weeks of trading. This happened as the Holiday Season and the year-end are approaching, which forces institutional investors to balance their trading books. Over the last week of trading this was certainly reflected in the equity market, which barely moved from one day to the other.

Market Wire Update: The Dollar Index And The $78.00 Area

Forex Trader Note: The dollar index is swinging around the $78.00 area, with a close above $78.50 breaking a price point that has been very important to the market in trade this year. A move under $77.50 would allow the major pairs to test the strength of recent USD buying that as yet really has not been back to test the break-out areas.

The major pair price points show that the long-USD trend is firmly in place, with momentum reads that are indicating that there is little room to move before overbought reads impact trade. The latest leg of dollar buying has pushed near-term time-frames into overbought reads on the dollar.

The currency market followed a pattern similar to the one seen in Monday trade. Despite the positive cash and futures equity markets, the major pairs have failed to move outside of their previous session ranges. The exception was the pound, after the U.K. GDP read disappointed investors once again. The Canadian dollar proved to be the strongest currency against the Usd, being the only one of the majors that actually strengthened against the dollar. Looking ahead, the overall trading volume is expected to remain subdued, as the market prepares for the Holiday break.

Equity Futures: Dow +36.00. S&P +3.50. NASDAQ +8.25. Japanese Nikkei +10.00. German Dax +13.00.

European Trade: European shares continued to advance for a second consecutive day in Tuesday trade, even though the macroeconomic releases are not very positive. U.S. futures also added a few points overnight, with the S&P futures continue their consolidation in the 1110.00 area.

The major pairs saw some action during the European session, after a flat Asian session, but little of it looked sustainable. As seen in the equity and in the commodity markets, the trading volume remained thin throughout the Asian and the European sessions, most likely due to upcoming Christmas and New Year Holidays. One exception proved to be the cad, which dropped 80 pips ahead of the retail sales report, expected at 08:30 EST.

Equity Futures: Dow +9.00. S&P +1.50. NASDAQ +4.50. Japanese Nikkei +10.00. German Dax +5.00.

European Trade: European shares turned positive in Monday trade, and following a pattern seen lately, trading volumes overnight remained subdued. The case was the same for the S&P 500 index, which traded on very thin momentum, having a range of only 5 points.

Forex Trader Note: The Global Market Driver reads on the 4 hour charts are showing Usd long trends and importantly, a neutral read on momentum. That tells us that the path of least resistance has been to buy the dollar, but that sentiment and order flows have weakened. The dollar rally stalled recently, as shown in the pip counts below for the whole of last week.

Eur/Usd +10. Gbp/Usd Flat. Aud/Usd +30. Usd/Cad -50. Usd/Chf -50. Usd/Jpy +50.

The major currencies were helped by S&P futures and by the cash equity market in gaining a few pips during the overnight session. However, compared to the sell-off seen over the last two weeks of trading, this intra-day uptrend is very small. Unless the cash and equity markets continue to stay into the green during the day, another round of Usd buyers might join the market during the upcoming U.S. session.

The one thing that may hold fair value on most markets is the expiry of December, quarterly, and yearly U.S. option contracts today. (Click to enlarge)

Equity Futures: Dow -19.00. S&P -2.00. NASDAQ -3.50. Japan Nikkei -90.00. German Dax -12.00

U.S. Trade: The global markets were surrounded by downbeat sentiment in Thursday trade, but still, the trading volumes remained light. The U.S. indexes lost approximately 1% during the cash session, but most of the trading was concentrated overnight and throughout the first part of the day.

Forex Trader Note: Friday brings the last day of trading in the Options market, as well as being the quarter and half-year expiration. Forex traders will be eyeing the major pair’s Daily charts, because the 100 and 200 day Simple Moving Averages are in play; these are areas of major importance.

The same Daily charts are as deeply overbought on the dollar as they have been in a very long time. The reason that momentum reads have hit deep levels is that the Usd buying has been sporadic in December, and centered around five or six 4 Hour chart moves that have housed all of the percentage gains.

In an article by John Browne at LearningMarkets.com, the historical moves in gold are used to reveal what the impact of recent gold plays will be on the Usd. As the price of gold has pulled back from its recent run up to $1,200, many investors are left to ponder what exactly drives the movement of such an important and financially sensitive commodity.

Most people are aware that gold prices respond to inflation expectations and that central banks, as the largest holders of gold, are big players in the market. But there is a very murky understanding as to why and how these players affect prices, and what their ultimate goal may be.

The sell-off experienced throughout the overnight session, especially during Asia, was a reaction to Wednesday’s FOMC meeting. With the Fed deciding to exit the quantitative easing strategies – for some, much earlier than expected – the market has a clear sign that the economy is heading towards recovery, and apparently (as the near-term market moves see it) at a stronger pace than the Euro-area or the U.K. economies.

The euro (Eur/Usd 1.4340) lost 200 pips at the beginning of the Asian session, reaching the lowest value in three months. The sell-off was triggered by the thought process that the U.S. economy is recovering much faster than expected, something that has forced the market to revalue the U.S. dollar. On the 4-hour chart, the euro is trading in a very steep downward channel, that has to now break some major support areas built over the last two years of trade.

Equity Futures: Dow -24.00. S&P -3.00. NASDAQ -6.00. Japanese Nikkei +50.00. German Dax -11.00.

European Trade: European shares turned negative around the opening bell in Thursday trade, following risk-averse global momentum that looks have the markets at a swing change. Asian equity markets closed lower, while S&P futures also lost a few points, reaching the 1095 area ahead of the Wall Street open.

Equity Futures: Dow -26.00. S&P -2.70. NASDAQ -6.50. Japan Nikkei +15.00. German Dax -11.00

U.S. Trade: The trading momentum was again very light on Wednesday, as the market prepared for, and then reacted to, the FOMC monetary meeting statement. Even once the Fed was out of the way, the cash and futures equity markets failed to move.

Equity Futures: Dow +43.00. S&P +5.40. NASDAQ +10.00. Japanese Nikkei +23.00. German Dax +5.00.

European Trade: European markets have returned to positive trading in the Wednesday session, helped by a number of macroeconomic reports. On slow momentum, the S&P futures started heading higher, towards the 1115.00 area, where the market had previously topped.

Overall, the macroeconomic calendar threw a life-saving line to the euro and the other major pairs in Wednesday trade, helping the currency market set an intra-day base. In addition, the same macroeconomic calendar had a strong effect on the pound, helping it surge 100 pips at a time the rest of the market was moving side-ways. Looking ahead, the U.S. session is expected to remain active, especially through the late hours, when the market prepares for the FOMC decision at 14:30 EST.

The euro (Eur/Usd 1.4555) saw a few attempts to break below the 1.4500 area during the overnight session, but so far, it failed to pull the move. In Tuesday trade, the euro also based in the 1.4500 area. The euro bears might find it hard to push lower from where the market is standing right now. Throughout the overnight session, the Euro-area and German PMI numbers came in better than expected, which provided some support for the Eur/Usd. On top of this, the cash and equity futures markets have turned into the green, which usually creates U.S. dollar short positions.

The pound (Gbp/Usd 1.6330) had a strong European session, after a report showed that the U.K. labor market is turning around. This has helped the pound surge 100 pips, breaking above a major trend-line that held the market over the last week of trading at 1.6250, something that is usually seen as bullish. However, the pound has now to confirm this breakout, by closing on the daily chart above the trendline.

Forex Trader Note: Usd weakness may hit on the strength of risk tolerance in the global market, with 1105 being the main price point to monitor on S&P futures trade. A daily close on either side of that may determine direction for the upcoming global sessions.

Questions on Usd strength will continue until fair value is found off the economic calendar this week, for the next two weeks the calendar is packed with red flag releases. Look for the mixed momentum in the forex pairs to continue, and therefore to be ready to bank near-term targets on most trades taken until the 4 hour trends and momentum reads get aligned.

Equity Futures: Dow +17.00. S&P +5.70. NASDAQ +14.50. Japan Nikkei -60.00. German Dax +5.00

U.S. Trade: The cash equity market came almost to a standstill throughout the U.S. trading hours, with the Dow Jones index having a range of only 30 points, or 0.30%. Trading was more active in the S&P 500 and in the NASDAQ, but overall, the volumes recorded are far below the averages of the last few weeks. That did not stop the indexes holding close to yearly highs, and setting up a bullish near-term trend.