Dollar Records Mixed Performance Ahead of Holiday Slowdown
The US dollar was mixed against its major trading partners early Monday as markets eye the holiday period starting at the end of the week. The data schedule is light to start the week, with only the November leading indicators report on Monday followed by minor reports on Tuesday before picking up steam later in the week.
Gross domestic product, consumer confidence and existing home sales reports will be released Wednesday and personal income and spending, initial jobless claims and new home sales releases are scheduled for Thursday as data providers pack in their releases before Friday’s holiday and the usual lull between Christmas and New Year’s Day next week.
A quick summary of foreign exchange action heading into Monday shows that USD-CAD rose slightly to 1.2918 from 1.2893 at the Friday US close, pulling even with the pre-Federal Open Market Committee meeting high from last week and well ahead of 1.2754 at the same point last week.
The Bank of Canada could be the next G-7 central bank to raise interest rates and help give the Canadian dollar a boost, but at present, the US dollar is benefitting from the Fed’s hawkish tilt and the relative strength of the US recovery. There are no Canadian data scheduled for release Monday.
USD-JPY slipped to 113.6544 from 113.7146 at the Friday US close, below the 114.1654 peaks after the FOMC meeting but before the Bank of Japan’s decision to trim support to large firms.
The pair remain above the 113.6406 level a week ago, as the yield differential between the US and Japan remains wide and will widen further as the Fed moves through its accelerated tightening.
GBP-USD fell to 1.3208 from 1.3235 at the Friday US close, down from the 1.3259 level a week ago.
The pair gained ground last week when the Fed announcement wasn’t as hawkish as some had feared and was lifted to a peak of 1.3361 after the Bank of England decided to raise interest rates.
However, it lost ground Friday as the accumulated days of record new COVID cases last week, many from the omicron variant began to weigh on the market’s confidence.
EUR-USD rose modestly to 1.1275 from 1.1236 at the Friday close, down from the peak of 1.1348 but slowly recovering some of its losses from late last week.
The European Central Bank’s announcement Thursday that it will end its emergency bond purchases but continue its other purchases and keep rates near zero until 2023 kept the ECB well behind the Bank of England and the Fed in the tightening cycle. #Dollar Records Mixed Performance Ahead of Holiday Slowdown
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