Having made some significant days on Monday, the US dollar had a rather quiet Tuesday Asian session with Japanese markets closed because of a national holiday. The dollar traded at a 2-week high versus the yen, helped by the rally in stocks on Wall Street as major indices closed at fresh record highs. It traded as high as 120.18, consolidating above the 120 level but below the December 8 high of 121.86.
The euro continued to drop on anticipation that the ECB would move ahead with sovereign bond purchases in the New Year. It made a fresh 2-year low the previous day of 1.2216 against the dollar and traded between the 1.2216-1.2234 range.
The Australian dollar was weak as the 81 cent level against the US dollar gave way and a new 4 ½ year low was registered at 0.8087. Broad weakness in commodities was the main reason behind the aussie’s decline, as Saudi Arabia said it would not cut its oil output leading to lower oil prices at around 55 dollars per barrel and gold also retreated below the 1200 mark at 1180 dollars per ounce.
There was a raft of US data later in the day, such as the final US GDP figures for the third quarter, personal spending and income for November, durable goods orders also for November and final December University of Michigan consumer sentiment. Prior to that, final GDP numbers from France and the UK would also be released. Overall the market was giving the impression that it was winding down ahead of the Christmas and New Year holidays but traders would likely engage in some last-minute window dressing from which the year’s winners would probably benefit.