Currency Pairs: Pound Edged Higher Against The Dollar
ICM | Dec 31, 2013 04:29AM ET
EUR/USD
The euro rose against the dollar on Monday after disappointing U.S. home sales numbers sent investors ditching the greenback on sentiments that even though the Federal Reserve is in the process of winding down stimulus programs, monetary authorities will take their time dismantling monetary support tools until the economy shows marked improvement. The National Association of Realtors reported earlier that its pending home sales index increased by a seasonally adjusted 0.2% in November, far shy of market expectations for a 1.0% gain. Pending home sales for October were revised to a 1.2% decline from a previously reported drop of 0.6%. The disappointing data sent the greenback falling, wiping out gains locked in when the Federal Reserve announced it would trim USD10 billion from its USD85 billion in monthly bond-buying purchases beginning in January. The Fed has said it may taper the program even more should data show that economic recovery is gaining steam. The euro, meanwhile, continued to see support after European Central Bank Governing Council member Jens Weidmann on Friday said keeping interest rates low may endanger political reforms.
GBP/USD
The pound edged higher against the U.S. dollar in subdued holiday trade on Monday, as demand for the greenback weakened after data showed that U.S. pending home sales rose less-than-expected last month. The dollar came under pressure after the U.S. National Association of Realtors said its pending home sales index increased by a seasonally adjusted 0.2% last month, disappointing expectations for a 1% gain. Pending home sales for October were revised to a 1.2% decline from a previously reported drop of 0.6%. But the greenback's losses were expected to remain limited amid expectations for further stimulus tapering by the Federal Reserve. The U.S. central bank will start reducing its bond-buying stimulus program by USD10 billion a month in January, amid indications of an improving U.S. economy. Meanwhile, market sentiment remained supported after European Central Bank Governing Council member Jens Weidmann on Friday said keeping interest rates low may endanger political reforms.
USD/JPY
The dollar edged lower against the yen on Monday after data on U.S. home sales numbers disappointed investors and rekindled sentiments that even though the Federal Reserve is scaling back stimulus tools, monetary authorities will taper slightly until the economy shows more improvement. The National Association of Realtors reported earlier that its pending home sales index increased by a seasonally adjusted 0.2% in November, far shy of market expectations for a 1.0% gain. Pending home sales for October were revised to a 1.2% decline from a previously reported drop of 0.6%. The disappointing data sent the greenback falling, wiping out gains locked in when the Federal Reserve announced it would trim USD10 billion from its USD85 billion in monthly bond-buying purchases beginning in January. The Fed has said it may taper the program even more should data show that economic recovery is gaining steam while adding soft patches could prompt the U.S. central bank to hike up monthly bond purchases to ensure price and labor-market stability. Still, losses were somewhat limited as the yen came under pressure on speculation that the BoJ will expand its stimulus program in the coming months in order to meet its target of 2% inflation by 2015.
USD/CAD
The U.S. dollar edged lower against its Canadian counterpart on Monday, as market sentiment mildy improved in thin holiday trade, although demand for the greenback remained supported by the Federal Reserve's recent decision to taper its stimulus program. Risk-related assets received a boost after European Central Bank Governing Council member Jens Weidmann on Friday said keeping interest rates low may endanger political reforms. According to Germany’s Bild newspaper, Weidmann said low inflation shouldn’t be used to justify loose monetary policy. "We must take care to raise interest rates again in a timely manner should inflation pressures build," he reportedly added. Also Monday, Italy’s Treasury sold EUR3 billion worth of ten-year debt at an average yield of 4.11%, up from 4.01% at a similar auction last month. The yield on Italian 10-year bonds stood at 4.163% following the auction.
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