All quiet after some modest moves yesterday

The yen was a notable laggard in trading yesterday amid thinner market conditions. It comes as risk trades rallied with stocks carrying over the Santa Claus rally post-Christmas. The S&P 500 hit fresh record highs and is now nearing 4,800.

The unbridled optimism has also seen AUD/JPY erase its omicron losses while USD/JPY is closing in on 115.00:

USDJPY D1 28-12

The figure level and November highs close to 115.50 will be key areas to watch next from a technical perspective. In that respect, the weekly close may be the more important thing to be mindful about.

It looks like risk optimists are the ones taking charge so far during the festive to New Year’s period. Just remember that liquidity conditions are thin during this time, so you might want to think twice about chasing any moves. Personally, it’s my least favourite time to trade and the last two weeks generally is a good time to recoup/spend with family and loved ones.

For now, risk trades are sitting comfortably but again, I’m skeptical in trusting moves during this time. That said, one can’t argue with the charts either but we’ll see if there is any follow through next week.

I mean it wouldn’t be the first time risk trades rallied into year-end only to stumble on the opening day of the new year. The 2021 start was already a case in point.

Anyway, the market is looking rather subdued so far today and that is more befitting of the holiday nature before New Year’s. There is little change among FX (as seen below) and US futures are also more tepid so far today.

FX 28-12

We’ll see if anything changes later but for now, things are keeping quieter as one can expect it to be.

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