Euro eases, dollar perks up in muted holiday trade
Yen slips but set for weekly jump
Euro eases after Weds surge following hawkish policymaker remarks
S. Korea cuts rates, dealers say authorities sell dollars
Updates at 1500 GMT
By Medha Singh and Tom Westbrook
Nov 28 (Reuters) -The euro dipped against the dollar on Thursday as traders reined in bets of more interest rate cuts by the European Central Bank, while broader currency moves were muted in U.S. holiday-thinned trading.
The Japanese yen JPY=EBS slipped to 151.58 per dollar but with its 2.1% gain this week the currency has recovered losses suffered since the U.S. election and was heading for its best weekly showing in three months. Markets see about a 53% chance the Bank of Japan will raise rates next month.
Broad trade was light as U.S. stock and bonds markets were shut for the Thanksgiving holiday.
The dollar index =USD ticked up to 106.21 after dropping to as low as 105.85 in the prior session, a two-week trough.
"It's likely to be a subdued couple of days to wrap up the week but I expect the dollar should rebound as December gets underway," said Michael Brown, senior research strategist at Pepperstone, adding that Wednesday's move that put the dollar back under 106 seemed a bit "detached from fundamentals."
"We're still talking about U.S. exceptionalism, an incredibly long laundry list of issues in the euro zone and now we've got French budget worries this morning."
The euro EUR=EBS slipped 0.2% to $1.054625 after its sharp rise on Wednesday following hawkish remarks from European Central Bank board member Isabel Schnabel
The comments prompted investors to pull back on more aggressive rate cut expectations and buy the common currency which is on track for its worst month in two-and-a-half years.
German annual inflation was flat in November despite expectations of a second consecutive increase. It comes ahead of euro zone inflation data on Friday which could offer hints on the ECB's next steps.
Money markets now see only a 13% chance of a larger 50 basis points rate cut by the ECB, whereas last Friday it was a toss up. A 25 bps move is fully priced in.
"Today’s macro data releases in the euro zone should encourage the ECB hawks to object to a 50bp rate cut in December," said Carsten Brzeski, global head of macro at ING.
Eyes are also on France's fragile coalition government, which is struggling to pass a budget.
HOLIDAY LULL
Sterling GBP=D3 was little changed at $1.2666 versus the greenback, while the Swedish crown SEK=D3 firmed against the dollar and euro EURSEK=D3 as data showed sentiment among businesses and consumers in Sweden picked up in November.
The Australian dollar AUD=D3 recovered from early weakness and gain slightly to $0.6501. Reserve Bank of Australia governor Michele Bullock said that core inflation was too high to allow for rate cuts in the near term.
While the currency majors were in a bit of a lull, there was some action in emerging markets.
Russia's rouble RUB= strengthened to just over 110 per dollar after shedding nearly a third of its value since August as the Russian central bank said it would stop forex purchases until the end of the year to support the currency.
Brazil's real BRL= touched a record low on concern over the impact of tax cuts on a stretched budget.
South Korea's won KRW= was a little weaker after the central bank cut rates at a second straight meeting - an outcome only four of 38 economists polled by Reuters had foreseen.
World FX rates https://tmsnrt.rs/2RBWI5E
Reporting by Tom Westbrook and Medha Singh; Editing by Sonali Paul, Kim Coghill and Susan Fenton
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
