Dollar holds steady

NEW YORK:

The dollar held steady yesterday, lingering about half a percent below a 14-year peak set earlier this week, as traders moved to the sidelines ahead of the Christmas holiday weekend. The greenback will likely test fresh multi-year heights when investors return from their year-end holiday break. The dollar has rallied more than 5 percent against a basket of currencies since Donald Trump’s surprise US presidential election win on Nov 8.

“No one wants to take additional risk between now and the end of the year. They don’t want to jeopardize those gains,” said Stan Shipley, strategist at Evercore ISI in New York. Traders brushed off upbeat US new home sales and consumer sentiment data, which reinforced the view the world’s biggest economy is expanding faster than its European and Japanese counterparts. Bets that Trump’s economic policies would promote faster US growth and inflation have fed appetite for the dollar, stocks and corporate bonds and stoked selling in the yen, gold and US Treasuries.

Federal Reserve’s hint that it might raise US interest rates at a faster pace in 2017, together with European Central Bank and Bank of Japan maintaining their ultra-loose policy stance, have further bolstered the dollar in recent days. The dollar index was marginally firmer at 103.14, recovering from an earlier low of 102.89. It was not far from the 14-year peak of 103.65 reached on Tuesday. — Reuters