Dollar Rises as U.S. Trading Resumes, Treasury Yields Support

  • Trading volumes muted; some ranges get stretched slightly
  • Consumer confidence robust, while manufacturing gains

The dollar built slight gains as foreign exchange trading in Europe and North America resumed after the Christmas break, and as U.S. yields rose before the Treasury sold $26b of two-year notes at 1.280%, the highest yield since 2008.

The dollar’s gains amid muted flows and mostly tight trading ranges were paced by advances against the Japanese yen and the Canadian dollar, while the greenback lost ground versus the euro; emerging market currencies were mixed.

  • U.S. economic data was upbeat, though the data itself was not a noticeable driver of price action; the December Conference Board consumer confidence index rose to 113.7 vs est. 109.0, while the Richmond Fed manufacturing index climbed to 8 vs expectations for a more modest gain to 5
  • USD/CAD rose to a fresh high at 1.3568; FX flows were muted and CAD gained no support from a more than 1% rise in WTI; CAD remains defensive after the October GDP report showed that the economy unexpectedly contracted
  • There’s little in the way of significant Canada data out this week that may shift sentiment, though USD/CAD may find technical resistance at the November high 1.3589
  • USD/JPY is trading near a fresh high at 117.62; the dollar rose as UST yields gained in the session and U.S. stocks advanced
  • EUR/USD is trading at 1.0452 vs a marginal fresh high at 1.0463; EUR gaining slight lift from EUR/GBP, as sterling stayed on a defensive footing before U.K. markets reopen tomorrow
  • EUR is holding below the Monday high at 1.0468 while trading above tech support from the Dec. 23 low at 1.0427
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