The dollar ended on a mixed note Thursday as thin conditions led to wide swings, financial market shrugging off upbeat U.S. economic data. Euro-dollar was changing hands at $1.3241 Thursday, the euro modestly below its early level of the day after traversing $1.3213-95 during U.S. hours after beginning the day at $1.3242. Dollar-yen meantime was trading at Y84.42, the dollar in the upper reaches of the day’s Y84.05-44 U.S. hours range after beginning the day at Y84.12. Afternoon dealings were at a tepid pace after the euro had seen wide ranges in morning action, a problem of poor liquidity and minimal participation. Early on in the day, euro-dollar had enjoyed a solid rebound off overnight lows to stretch gains to $1.3295, a rally fueled by demand for euro-sterling and euro-yen. But as that demand abated, and euro longs bailed quickly ahead of offers at $1.3300, the single currency fell back quickly for late morning lows at $1.3213, underscoring the thin conditions that prevail as currency markets wind down ahead of year-end. After skidding to that low, euro lifted modestly as a modest stock rally boosted risk-appetites. In afternoon trading the Dow Jones Industrial Average was holding gains of about 35 points, a modest reversal from slight losses seen in morning dealings. Traders warned that flows on the day were modest at best, currency swings driven more by liquidity concerns than by shifts in sentiment, markets shrugging off upbeat U.S. economic data released early in the day. In similar fashion, dollar-yen was holding near its high of the session in
afternoon dealings, a tiny uptick in U.S. Treasury yields serving as a proximal excuse to keep this pair underpinned at a time when the yen remained broadly defensive. U.S. economic data released Thursday was modestly upbeat, showing signs of a rebound from Superstorm Sandy inflicted damage. Third quarter real GDP growth was revised up to 3.1% and real final sales rose 2.4%, with more health spending, more exports/less imports, and more S&L structures. Weekly initial unemployment claims rose 17,000 to 361,000 in December 15 payroll survy week, with nothing unusual, compared with 416,000 in mid-November. The hurricane and the holidays make this a dodgy forecast tool. November existing home sales rose 5.9% to a 5.04 million annual rate compared with 4.9 million expected, 14.5% above a year earlier and the highest since November 2009 when a tax credit was due to expire. The December Philadelphia Federal Reserve manufacturing index rose to 8.1 after a -10.7 November reading. Data included prices at 27.8, new orders at 10.7 following -4.6, and employment at 3.6 following -6.8 previous. The Philadelphia Fed said, “Manufacturing activity rebounded in December Business Outlook Survey. Following reported declines in business activity in late October and early November from the effects of Hurricane Sandy, most of the survey’s measures showed notable improvement this month.”
EasyForexNews Research Team