Calm descends on forex markets

This year has been a tumultuous one for financial markets: US equity markets soared to all-time highs, bond markets were turned upside-down as the yield curve became firmly inverted, and the USD dropped 10% or more against many of the world’s currencies. Forex traders are resting easy this week, which is perennially one of the slowest of the year. The markets are functionally closed, as most market participants are on vacation, and those who remain are evaluating the performance of their portfolios in 2006 and/or mapping out their investment strategies for 2007. In short, you can expect low volatility over the next week or two, before a spate of economic data and central bank meetings kick of the new year in January.

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