Dollar Erases Drop as JPY Pares Advance, CAD Wilts With Crude

  • SEK gains more than 1% after hawkish Riksbank dissent
  • Sparse liquidity keeps trading to just the bare essentials

The dollar erased most of an early drop to trade little changed and leaving it mixed vs its G-10 peers, though the end-of-session recovery belied some sharp intraday swings as sparse liquidity exacerbated the impact of even the most modest flow.

The dollar’s rebound was led by a solid bounce in dollar-yen off its early low, aided by a later spike higher in dollar-Canada as crude slid sharply in afternoon trading; in each case, trading volumes were only modest and price swings larger than may usually be seen for the magnitude of the flow, traders said.

Flows remain limited and confined to just essential hedging and position trimming, traders in London, New York and Toronto said.

Dollar shifts were mostly modest, less than 0.4% within the G-10 group, though the Swedish krona was an exception with a gain of 1.4% after the Riksbank kept rates on hold and extended QE purchases for six months, though not without some dissent that was seen as having hawkish implications.

  • USD/JPY trading ~117.60 late in the day after a rebound off the morning 117.11 low, touching 117.87 before stalling; USD saw a burst of demand around the London fixing and pace of gain may have caught some intraday shorts offsides, a trader in New York said
  • Offers are in place above 118.10, above the overnight high, another trader said
  • EUR/USD ~1.0430 is trading near midrange after an early climb to 1.0451 in line with earlier dollar slippage elsewhere
  • EUR may find offers near 1.0500, where large option strikes expire Thursday
  • USD/CAD trading ~1.3400 vs session high 1.3427, the CAD weakening with an afternoon drop in WTI and ahead of economic data that may underscore BOC concerns of considerable slack in the economy; Crude set afternoon lows after seeing little initial response to EIA data showing an unexpected rise in inventories
  • U.S. markets face a slew of data Thursday, though it’s likely to take sharp divergence from forecasts to shake a moribund market before the holidays, traders say
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