Euro Snaps Three-Day Drop as Liquidity Evaporates Into Weekend

  • UniCredit, Deutsche Bank stick with bearish call on currency
  • Nordea says many clients have closed their books for the year

Stronger Dollar in a Post-Trump World

Calm descended on the markets as the dollar halted three days of gains and Treasury yields fell, with traders reporting lower-than-average volumes going into the weekend.

The euro rebounded after falling to the lowest level in 13 years on Thursday, while sterling was trading near its 50-day moving average. The Australian dollar headed for its biggest weekly drop in a month.

“The markets are taking a breather after the Fed,” said Aurelija Augulyte, a Copenhagen-based currency strategist at Nordea AG. “Trading volumes are below average as clients are mostly done for the year.”

  • EUR/USD advances 0.5% to 1.0463; the break below 1.0500 may trigger more weakness given thin liquidity going into the year-end, UniCredit AG analyst Vasileios Gkionakis wrote in a note to clients Friday
  • A stabilization in Treasury yields is attracting fresh buyers, which may end up being even more negative for EUR/USD, according to Deutsche Bank analyst George Saravelos; the bank remains bearish on the currency, expecting it to slide to at least 95 cents next year
  • GBP/USD steady at 1.2423; is hovering near 50-DMA at 1.2412
  • AUD/USD falls 0.2% today, taking weekly loss to 1.4%; pair poised to drift toward 0.7140/0.7100, according to Societe Generale
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