Difficult to assess the nature of investor attitudes coming into a new year

It is very difficult to assess the nature of investor attitudes coming into a new year. The question again this year will be whether or not the market thickens up and correct some of the exaggerated moves seen in thin markets during the dying days of 2010. Or will the real money buying of risk assets and risk currencies continue at the expense of the US dollar for the first few days of 2011 at least?

Looking at the AUD/USD for the past two years - the end of year trend leaked into the first few days of the following year before staging nasty reversals later in January. The AUD/USD was moving higher at the end of 2009 - rising from 0.8735 on Dec 23 to finish the year at 0.8975. The trend higher continued into Jan 2010 and the AUD/USD traded at 0.9331 on Jan 14. The trend reversed lower and the AUD/USD was down at 0.8578 by Feb 5. It was a similar story for the AUD/USD is 2008. The AUD/USD traded from 0.6780 on Dec 23 to close the year at 0.7005. It continued to trend higher at the start of 2009 and traded to 0.7269 on Jan 6. The AUD/USD then staged a nasty reversal and was down at 0.6250 by Feb 02. The AUD/USD trades 1.0204/09.