Currency markets were relatively quiet at the beginning of a holiday-shortened week. Consequently trading volumes were light but there was slight risk appetite.
After revisiting Friday’s 2-year low in early Asian session trading, the euro edged higher in the European session to trade between 1.2249 and 1.2271.
Eurozone consumer confidence data helped support the euro. According to a flash estimate from the European Commission, the confidence index rose 0.6 points in December from the prior month’s revised minus 11.5 points. Expectations were for a value of minus 11.0.
Sterling traded within Friday’s range against the dollar. During the European session it fell towards the lower range, from a high of 1.5664 to 1.5597. News flow and data were light today. The Bank of England’s Financial Policy Committee released minutes of their latest meeting but this did not affect the pound. The market is looking ahead to Tuesday’s final GDP print for the third quarter although this is not expected to make much impact on the British currency either.
The dollar continued its upward trend against the yen, rising for a fourth straight day to approach near the 120.00 level. Further gains were capped by disappointing US existing home sales. According to the US National Association of Realtors, sales of previously owned homes dropped 6.1% in November to a seasonally adjusted annual rate of 4.93 million. This was a bigger decline than was forecast. Expectations were for a fall to 5.2 million, down from 5.25 million in October. Focus now shifts to Tuesday’s US durable goods data and the final reading of GDP data. Meanwhile, Japanese markets will be closed on Tuesday.