Euro, Pound Among Top Gainers as Dollar Falls on Thin Trading

Updated on
  • Greenback falls versus most of its G-10 peers; Treasuries gain
  • Market waits for tier-one U.S. data releases later in the week

Why the Euro Is Driving Higher

The euro continued its climb toward 1.2000, extending gains from last week as traders looked ahead to month-end repositioning and continued to avoid the dollar amid U.S. debt ceiling concerns and Nafta negotiations.

The common currency rose as high as 1.1984, gaining 0.5 percent to its highest since January 2015. The pound and Australian dollar enjoyed similar advances as gold traded through $1,300 an ounce, while the loonie slumped amid a drop in crude after a hurricane devastated the heart of the U.S. oil industry. U.S. personal consumption data Thursday and August jobs data Friday will be a focal point for traders later this week.

  • The dollar dropped vs 8 of its G-10 peers, gaining against only the Canadian dollar and the Norwegian krone, which fell as WTI crude oil traded lower. The Bloomberg Dollar Spot index slipped less than 0.1% as most U.S. Treasury yields declined. Tropical Storm Harvey, which made landfall as a category 4 hurricane, continued to weigh on U.S. markets after wrecking havoc on southern Texas over the weekend
  • EUR/USD traded near its session high of 1.1984 and was eyeing the psychological level of 1.2000. ECB President Draghi’s lack of pushback against the common currency’s strength at Jackson Hole emboldened euro bulls, who added to net long positions ahead of Friday’s speeches, CFTC data show. Option-related offers lie below resistance at 1.2000, said a Europe-based trader, who asked not to be identified as he wasn’t authorized to speak publicly
    • Month-end portfolio position squaring could be bullish for the euro, which has been attracting haven demand, said Karl Schamotta, director of FX research at Cambridge Global Payments
  • USD/CAD traded near a session high of 1.2505. The pair has pivot resistance at 1.2510, with interest to sell up to 1.2550, according to Toronto traders. The pair reversed overnight losses as crude oil prices declined; GBP/CAD short covering and EUR/CAD buying also helped send CAD lower
  • USD/JPY was trading slightly lower at ~109.28, erasing most of its losses seen earlier in dip to session low 109.03. The pair earlier rose briefly to a fresh high of 109.41. The Chinese yuan jumped as much as 0.65% to 6.6050 per USD for its biggest gain since January
  • USD/MXN rose more than 1.4 percent to trade above 17.8600 after Trump via Twitter over the weekend said negotiations with Mexico and Canada have been difficult. Canada PM Trudeau said on Monday that the talks are being conducted “in a thoughtful and engaged way”

— With assistance by Robert Fullem

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