By Ankur Banerjee
SINGAPORE, Dec 27 (Reuters) - The dollar remained under
pressure on Wednesday, while the euro flirted with a four month
peak, as expectations that the Federal Reserve would soon cut
interest rates take hold in the market, with thin year-end flows
keeping movements limited.
With traders out for holidays globally until the New Year,
the curtailed week is likely to see muted volumes.
The dollar index, which measures the U.S. currency
against six rivals, was at 101.54, just shy of the five month
low of 101.42 it touched last week. The index is on course for a
1.9% drop in 2023 after two straight years of strong gains on
the back of the Fed hiking rates to battle inflation.
The recent weakness in the dollar has been a result of the
markets anticipating rate cuts from the Fed next year denting
the appeal of the greenback.
Markets are now pricing in a 79% chance of a rate cut
starting in March 2024, according to CME FedWatch tool, with as
much as 153 basis points of cuts priced in for next year.
"With little to speak of on the economic calendar for this
week between global holidays, we do not expect a large swing in
pricing to wrap up this calendar year," said analysts at Monex
USA.
"Liquidity across the world will remain quite thin as many
offices remain closed, which could give us some choppiness in
markets, but largely this week is expected to remain fairly
uneventful."
Meanwhile, the euro was down 0.07% to $1.1034,
having touched a four month high of $1.1045 on Tuesday. The
single currency is up nearly 3% in the year and is on course for
third straight month of gains, matching the run it had last
year.
The Japanese yen weakened 0.17% to 142.64 per
dollar and is headed for a 8% drop in the year although the
Asian currency has witnessed a bout of strength in recent weeks
as traders wager that the Bank of Japan will soon exit its
ultra-loose policy.
A summary of opinions at the central bank's Dec. 18-19
meeting showed that BOJ policymakers saw the need to maintain
ultra-easy monetary policy for now, with some calling for a
deeper debate on a future exit from massive stimulus.
Elsewhere, the Australian dollar and the New
Zealand dollar both touched a fresh five month peak but
were down a touch in early trading. The Aussie last bought
$0.6822, while the kiwi was at $0.6321.
========================================================
Currency bid prices at 0124 GMT
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar $1.1033 $1.1043 -0.09% +2.97% +1.1044 +1.1032
Dollar/Yen 142.6800 142.3900 +0.23% +8.75% +142.8400 +142.6100
Euro/Yen
Dollar/Swiss 0.8541 0.8537 +0.04% -7.64% +0.8545 +0.8538
Sterling/Dollar 1.2717 1.2723 +0.00% +5.20% +1.2729 +1.2720
Dollar/Canadian 1.3201 1.3195 +0.05% -2.56% +1.3210 +1.3193
Aussie/Dollar 0.6820 0.6825 -0.07% +0.06% +0.6829 +0.6818
NZ 0.6322 0.6329 -0.12% -0.45% +0.6334 +0.6321
Dollar/Dollar
All spots
Tokyo spots
Europe spots
Volatilities
Tokyo Forex market info from BOJ
(Reporting by Ankur Banerjee in Singapore; Editing by Michael
Perry)