US Dollar edges lower in thin trading; loonie dips on oil weakness
Frankfurt (Dec 28) The US dollar held near a more than one-week low against a basket of major currencies on Monday as some traders who had taken bullish bets on the greenback took profits ahead of year- end, while the Canadian dollar fell on a dip in oil prices.
Trading was thin, with Australia and the London market closed for local holidays and major dealing rooms across Europe empty or operating on skeleton staffing.
Bullish bets on the dollar were popular this year on the view that an expected Federal Reserve interest rate hike and looser monetary policy abroad would boost the greenback.
The dollar will likely remain within tight trading ranges given the absence of new signals about the timing of the Fed's next rate increase, said Eric Viloria, currency strategist at Wells Fargo Securities in New York.
"Until we get stronger or more hawkish signals from the Fed, the dollar’s performance could be somewhat moderate," he said.
The dollar index, which measures the greenback against six major currencies, was last down 0.07 percent at 97.917 .DXY. The index hit 97.811, its lowest level since Dec. 16, in early trading.
The euro EUR=EBS was last up 0.05 percent against the dollar at $1.09750, just below a more than one-week high of $1.10000.
While the dollar was down slightly against the yen, it edged up from a near two-month low of 120.050 yen hit on Friday. Japanese markets were open on the Christmas holiday, when the U.S. and London markets were closed.
The yen has been less popular this year with traders than the dollar. The greenback is up about 0.6 percent against the yen this year, because the Bank of Japan is one of the central banks loosening monetary policy.
The dollar was last down 0.09 percent against the yen, at 120.345 yen JPY=EBS.
The Canadian dollar, which is sensitive to oil price moves because Canada is a major exporter of the commodity, fell against the dollar as oil prices tumbled. The dollar was last up 0.54 percent against the loonie, at C$1.3895 CAD=.
"The movement today in oil prices likely had an influence on the some of the Canadian dollar weakness," Viloria said.
Overall moves in currency markets were modest given thin trading conditions.
"London was off today, and that really adds to already thin year-end liquidity conditions," said Vassili Serebriakov, currency strategist at BNP Paribas in New York.