The U.S. Dollar is down against it’s G10 peers this morning for the third day
The U.S. Dollar is down against it’s G10 peers this morning for the third day in a row as volumes thin ahead of the Christmas holiday. Initial Jobless claims for the week ending December 20th were released this morning and came in slightly better than expected at 214k vs 224k expected, but that was offset by continuing claims coming in slightly higher than expected at 1923k vs 1900k expected, making this release largely inconsequential.
The Dollar is likely to continue its slide into the New Year. Looking at previous years, whenever the Dollar has been weaker throughout December, it has gone on to fall further nearly three-quarters of the time.
What to Watch This Week…
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JPY ⇑
The Japanese Yen is a top performer this morning, having gained more than a percent against the Buck this week. Trading is thin, but there is still room for further gains after a slight adjustment in positioning from Japanese PM Takaichi regarding short term bond issuance and direct intervention in the currency markets.
EUR ⇑
The Euro is up against the Greenback this morning on thin volumes, nearly 20% below average. The Euro is likely to be well supported as we transition into the New Year as the European Central Bank has the clearest interest rate trajectory among the G10. Recent news has indicated that the ECB is unlikely to continue cutting rates, which means that traders have begun guessing when a rate hike is going to come into play. We would expect the central bank to pause for at least the first half of the year, with a hike coming into play further down the line.
