The last day of the trading week was quiet in the absence of major economic data releases. Most currency pairs consolidated in ranges and US dollar strength was the main theme. The result of the FOMC meeting this week helped underpin the greenback.
The euro edged down to 1.2252 and has almost retraced the entire rally from the December 8 low of 1.2246 to the December 16 high of 1.2569. Better-than-expected data from Germany on PPI and consumer climate did not help the single currency. Meanwhile, Eurozone current account data showed its surplus narrowed in October.
Sterling was flat against the dollar, trading around 1.5655. News flow from the UK included public sector net borrowing numbers and CBI realized sales – neither of which had a major impact on the pound. Flows were mostly directed by broad dollar strength today. Next week’s UK third quarter GDP data will come into focus although it is a third reading and will unlikely have a large impact.
The yen remained weak today due to less risk aversion. The Bank of Japan statement today was as expected although expectations of further stimulus next year will likely continue to weigh on the Japanese currency. The dollar had the opportunity to extend higher against the yen due to the diverging monetary policies between the Fed and the BoJ. Dollar/yen hit a high of 119.49 before easing back to around 119.20 by 14:30 GMT. The pair was still up on the day.
Next week the US will release third quarter GDP data although this will not have a major impact as it will be a final reading of previous estimates.