U.S. Dollar Advances On Fed Rate Hike Expectations
The U.S. dollar strengthened against its most major counterparts
in the European session on Tuesday, amid hopes that the Federal
Reserve will continue to stick with its pace of rate hikes this
year.
Expectations are that the Fed could raise rates three times this
year, with many investors believing that the first could happen in
March.
Fed funds futures are pricing in a 61.6 percent chance for a
quarter-point rate increase to 1.50 percent - 1.75 percent in
March, according to CME.
The markets will be looking ahead to the January policy meeting,
which will help to gauge more light on the bank's plans for
monetary policy tightening this year.
With today's economic calendar being relatively light, investors
await U.S. import prices, producer prices, consumer inflation data
and retail sales numbers due this week for more direction.
The greenback showed mixed performance in the Asian session.
While it fell against the pound and the yen, it rose against the
franc and the euro.
The greenback that closed Monday's trading at 1.1967 against the
euro strengthened to near a 2-week high of 1.1921. The greenback is
seen finding resistance around the 1.18 region.
Figures from Eurostat showed that the euro area unemployment
rate declined to the lowest since 2009.
The jobless rate dropped to 8.7 percent in November from 8.8
percent in October. This was the lowest since January 2009. The
rate came in line with expectations.
The greenback strengthened to a 5-day high of 1.3514 against the
pound and held steady thereafter. The next possible resistance for
the greenback is seen around the 1.34 area.
Data from the British Retail Consortium showed that UK non-food
product sales decreased the most in five years in the fourth
quarter.
In-store sales of non-food items declined 3.7 percent on a total
basis and 4.4 percent on a like-for-like basis in the fourth
quarter, the deepest since the records began in December 2012.
The greenback spiked up to near a 2-week high of 0.9837 against
the franc, compared to 0.9772 hit late New York Monday. Further
uptrend may see the greenback challenging resistance around the
0.995 mark.
Data from the Federal Statistical Office showed that
Switzerland's retail sales decreased at a slower pace in
November.
Retail sales fell 0.2 percent year-on-year in November, slower
than the 2.6 percent decrease seen in October. This was the second
consecutive decline in turnover.
The greenback bounced off to 1.2448 against the loonie and
0.7163 against the kiwi, from its early low of 1.2398 and near a
3-month low of 0.7197, respectively. The greenback is likely to
locate resistance around 1.26 against the loonie and 0.70 against
the kiwi.
The greenback hit a 6-day high of 0.7813 against the aussie, off
its early low of 0.7865. Next possible resistance for the greenback
is seen around the 0.77 area.
Data from the Australian Bureau of Statistics showed that
Australia's building approvals rose a seasonally adjusted 11.7
percent on month in December, coming in at 21,055.
That beat forecasts for a decline of 1.3 percent following the
downwardly revised 0.1 percent contraction in October.
On the flip side, the greenback dropped to a 5-day low of 112.50
against the yen in the early Asian session and wavered between the
ranges of 112.97 and 112.64 during the European session.
Survey data from the Cabinet Office showed that Japan's consumer
confidence dropped unexpectedly in December, though slightly.
The seasonally adjusted consumer confidence index decreased to
44.7 in December from November's 50-month high of 44.9. Meanwhile,
economist had expected the index to rise to 45.0.
Looking ahead, at 8:15 am ET, Canada housing starts for December
are set for release.
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