Asian Session – Dollar continues to climb following Fed stimulus tapering
December 20, 2013 8:29 am
The dollar continued to post gains after the Fed’s decision to taper its monthly bond-buying, although the gains were contained as trading appeared to be winding down ahead of the Christmas and New Year holidays.
The euro fell 0.23% against the dollar to trade at 1.363, after rating agency S&P downgraded the European Union institutions from triple A (AAA) to double A minus (AA-). The agency cited rising tensions in budget negotiations and the rising probability that some member-states may object to funding the EU in the future.
The dollar was also strong against the Japanese yen, climbing 0.15% to 104.40 after posting a fresh five-year high of 104.60.
The Bank of Japan’s monetary policy announcement did not contain any surprises, as the bank decided to maintain its ultra-easy policy of accommodation and asset purchases. The BoJ’s stance contrasts with that of the Federal Reserve, which decided to gradually scale back its policy accommodation. At the same time the BoJ expressed some satisfaction with the pace of economic recovery and general economic developments.
There is currently some division among analysts concerning the fate of the BoJ’s asset purchase program. Some analysts expect the Bank of Japan to actually expand its asset purchase program in the months ahead, whereas others expect the program to remain the same as the Japanese economy stages a modest recovery. The impact of the April 2014 sales tax on consumer spending will also be key in that respect.
The pound was also slightly lower against the dollar as it fell 0.11% to trade at 1.6351. The US dollar was also helped by the rise in Treasury yields, as the 10-year rate rose to 2.95% following the Fed’s action.
The Australian dollar recovered 0.18% to trade at 0.8882 against the US dollar. During the previous day during New York trading, the Australian dollar hit a new 3-year low at 0.8839.
Concerning the remainder of the day, there was final GDP data for the third quarter concerning the United Kingdom and the United States. Eurozone consumer confidence and UK public finances and current account data were also expected.
According to traders, a number of market participants was already closing down positions for the year and trading was most likely going be light during the next week as the holidays would slow down trading.
The dollar continued to post gains after the Fed’s decision to taper its monthly bond-buying, although the gains were contained as trading appeared to be winding down ahead of the Christmas and New Year holidays.
The euro fell 0.23% against the dollar to trade at 1.363, after rating agency S&P downgraded the European Union institutions from triple A (AAA) to double A minus (AA-). The agency cited rising tensions in budget negotiations and the rising probability that some member-states may object to funding the EU in the future.
The dollar was also strong against the Japanese yen, climbing 0.15% to 104.40 after posting a fresh five-year high of 104.60.
The Bank of Japan’s monetary policy announcement did not contain any surprises, as the bank decided to maintain its ultra-easy policy of accommodation and asset purchases. The BoJ’s stance contrasts with that of the Federal Reserve, which decided to gradually scale back its policy accommodation. At the same time the BoJ expressed some satisfaction with the pace of economic recovery and general economic developments.
There is currently some division among analysts concerning the fate of the BoJ’s asset purchase program. Some analysts expect the Bank of Japan to actually expand its asset purchase program in the months ahead, whereas others expect the program to remain the same as the Japanese economy stages a modest recovery. The impact of the April 2014 sales tax on consumer spending will also be key in that respect.
The pound was also slightly lower against the dollar as it fell 0.11% to trade at 1.6351. The US dollar was also helped by the rise in Treasury yields, as the 10-year rate rose to 2.95% following the Fed’s action.
The Australian dollar recovered 0.18% to trade at 0.8882 against the US dollar. During the previous day during New York trading, the Australian dollar hit a new 3-year low at 0.8839.
Concerning the remainder of the day, there was final GDP data for the third quarter concerning the United Kingdom and the United States. Eurozone consumer confidence and UK public finances and current account data were also expected.
According to traders, a number of market participants was already closing down positions for the year and trading was most likely going be light during the next week as the holidays would slow down trading.
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