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US Dollar’s Advance Eases Ahead of Christmas Holiday

December 21, 2016 at 15:29 by Yahia Barakah

Focus on hundred dollarsThe US dollar edged lower against its major peers on Wednesday to give up some of the gains it made since Donald Trump’s win in the US presidential election. Trading volumes thinned as currency traders reduced their positions prior the Christmas holiday.

Trump’s victory, which was expected to hurt the US currency, was the triggering event for a strong surge in the dollar’s exchange rate against all of its major peers since the election day on November 8. The dollar climbed on anticipation for Trump’s plans of increasing fiscal spending, cutting corporate taxes, and reducing financial regulations to boost the US economic growth.

More recently, the greenback was further supported by a monetary policy decision from the Federal Reserve to raise its benchmark interest rate by 0.25% to 0.50% to 0.75% on December 14. Federal Reserve Chair Janet Yellen followed that by positive comments on the job market and unemployment rates on December 19.

However, traders felt poised to cash in the gains during the thin trading ahead of Christmas, which pushed the dollar lower. Two recent terrorist attacks in Turkey and Germany also raised traders’ preference to remain off the market.

The first attack, which happened in Ankara on Monday’s evening, took the life of Russian ambassador to Turkey Andrei Karlov at an art gallery. A few hours later, a truck plowed through a Christmas market in Berlin, resulting in 12 deaths and injuring about 50 people.

EUR/USD traded at 1.0435 as of 15:05 GMT on Wednesday, after touching 1.0448 at 14:40 GMT, the pair’s highest level in two days. EUR/USD opened trading today at 1.0387. GBP/USD was at 1.2382, after touching its highest level for the day at 1.2386 at 12:10 GMT. The pair started the day at 1.2365.

The Dollar Index, which measures the performance of the US currency against its major peers, was at 102.84 at 15:00 GMT, from 103.37 at 13:05 GMT. The index touched 103.29 on Tuesday.

If you have any questions, comments, or opinions regarding the US Dollar, feel free to post them using the commentary form below.

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