The US dollar climbed to 7-month highs on Tuesday as it recovered from yesterday’s brief slide post the Paris attacks. Investors have turned their attention back to the growing expectations that the US Federal Reserve will raise interest rates in December as concerns about any immediate impact from last Friday’s terrorist attacks in France have receded.
The greenback advanced to 123.42 yen in today’s Asian trading before easing slightly to 123.31 yen in late session.
Monday’s stronger-than-expected final Eurozone inflation numbers did little to dampen expectations that the European Central Bank will likely announce fresh stimulus measures in December. Eurozone CPI was revised up to 0.1% on an annual basis in October versus initial estimates of 0%. The euro extended yesterday’s losses when it lost the 1.07 handle to hit a low of 1.0649 dollars before rising slightly to 1.0663 dollars in late Asian session.
The pound also drifted lower against the dollar but was stuck within a tight trading range on the absence of any major news. Focus will now shift on the latest CPI data for the UK out later today. Sterling was down at 1.5180 dollars in late Asian session.
The Australian dollar briefly spiked up to 0.7107 against the greenback after the release of the RBA’s latest meeting minutes but fell back to 0.7080 in late Asian session. The minutes underlined the RBA’s cautiousness for further rate cuts given strong domestic demand and rising house prices, but kept the option for further rate reductions open should demand weaken.
The New Zealand dollar tumbled below the 0.65 level on Monday and came under further pressure from the latest inflation expectation survey out today that showed 2-year inflation expectations fell slightly for the fourth quarter. The kiwi was down at 0.6457 against the US dollar in late Asian session. The latest global dairy auctions due later today could also weigh on the kiwi.
Crude oil prices saw a brief rally yesterday following last Friday’s events but fell back today as immediate worries about disruption to supply faded. US oil futures were down at $41.59 in late Asian trading, having climbed above $42 on Monday.
Coming up later today, UK inflation figures for October and the German ZEW survey for November will be closely watched in European trading. In the US session, the dollar is likely to be sensitive to the October US inflation numbers, and to a lesser extent the latest industrial production data.
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