Pullback of the dollar

December 30, 2016

The dollar has lost its shine along with correction of US yields after a strong auction yesterday evening. This sparked a broad negative sentiment towards the US dollar which is still present. The US dollar has lost especially versus Antipodean currencies and euro, but a strong resistance at 1,0480 on the EURUSD holds a possible bigger correction of the dollar. The dollar weakness has led to a reversal of the yesterday move on EURUSD, but the move on USDJPY was even more striking. Breaching 117 at night must have triggered some stop losses and with thin holiday season trading the move has been easily extended into a support zone situated below 116,5. What is more, data from labor market was rather disappointment, because of a significant surge of continuing claims. 

 SEK was also supported by stronger data with a smaller-than-expeced trade gap and much higher pace of export and import growth which suggests improving economic activity. The release from Norway about retail sales did not make much difference to the market.

The weaker dollar is a positive sign for commodities which was seen especially on gold. The price of gold edged higher above 1150 USD today. We have noticed also a rebound of agricultural commodities, especially on sugar. On the other hand gains on oil were rather subdued and data from the USA concerning inventories was rather neutral. 

During Asian session there will be only data about credits in Australia. Tomorrow’s session should be rather flat due to the last trading day of the year and early close of markets in London and Frankfurt. 

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