Dollar Rises for Fourth Consecutive Year; DXY Index Up 3.5%

Updated on
  • Gain bolstered by 16.5% drop in sterling, 3% rise versus euro
  • Yen and Canadian dollar also showing gains for the year

Will 2017 Be Another Year of Dollar Dominance?

The dollar was on track for its fourth consecutive annual gain as measured by the DXY dollar index, set to close out 2016 with a gain of ~3.5% after rising as much as 5.1% at its peak on Dec. 20.

Gains for the year were led by a more than 16% advance against the British pound and more than 7% rise versus the Swedish krona. The dollar dropped about 3% against both the Japanese yen and the Canadian dollar while gaining around 3% versus the euro.

  • Friday trading was marred by choppy price action and sparse flows and liquidity, leading to some volatile price swings that began in the Asian trading session before subsiding slightly by the time U.S. trading got underway; the dollar was under pressure throughout the day because of month-end portfolio rebalancing and amid an unwind of stale USD longs, traders said
  • USD is lower on the day vs a a majority of its G-10 peers though holds small gains vs JPY; losses are ~0.4% as measured by the Bloomberg dollar index after fresh selling made for choppy price action around the 4pm London fixing
  • USD was further undercut by a rise in Treasuries that saw the yield on the 10-year note drop for a third session
  • EUR/USD trading ~1.0555 after rising close to 1.0700 in Asian trading as algorithmic-fueled buying and stop-loss driven demand outstripped the available liquidity; EUR fell back quickly from the high to hold above 1.0500 throughout the U.S. session
  • USD/JPY dropped to near 116.50 amid fixing-timed flows, sparse liquidity and unsubstantial volume, a trader in New York said
  • USD/CAD fell to a fresh low at 1.3401 at the fixing, CAD gaining despite small drop in WTI in the session
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