He global dollar rises this Thursday from a two-week low against its main peers in operations with little movement due to the holidays, although the yen was headed for its strongest week in almost three months on growing bets that Japan will raise rates in December.
The yen fell half a percentage point to 151.93 per dollar, but with its 1.9% gain this week the currency has recovered losses suffered since the US elections. Markets see a 65% probability that the Bank of Japan raise rates next month.
He dollar index rose slightly to 106.30 after suffering its steepest drop in four months which took it as low as 105.85 in the previous session. Trade in general was facilitated due to the Thanksgiving holiday in the United States, Reuters reported.
“It’s probably going to be a quiet couple of days to close out the week, but I hope the dollar to recover as December progresses,” said Michael Brown, senior research strategist at Pepperstone, adding that Wednesday’s move that put the dollar back below 106 seemed a little “off from fundamentals.”
“We continue to talk about American exceptionalism, an incredibly long list of problems in the euro zone and now we have concerns about the French budget this morning,” he added.
For its part, the euro consolidated after its strong rise on Wednesday following aggressive comments from Isabel Schnabel, member of the board of directors of the European Central Bank. Schnabel told Bloomberg that rate cuts should be gradual and move toward neutral, not accommodative, territory, prompting investors to retract expectations of more aggressive rate cuts and buy the common currency.
“Not only has the downward momentum faded, but upward momentum is also starting to build,” said Quek Ser Leang, a strategist at UOB in Singapore. “We view the current price action as part of a rally that could potentially reach $1.0650,” he added.
The figures of inflation which will be announced later in the session in Germany will offer the next test, as the common currency heads for its worst monthly performance in two and a half years. Eyes are also on France’s fragile coalition government, which is struggling to pass a budget.
Source: Ambito
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