The Greenback Eases A Bit As Traders Book Profits

The US dollar regained its footing after falling Monday in the North American session as traders sold off to book profits after the greenback touched 89.30. The euro fell to trade at 1.2304 against the stronger dollar. On Monday comments by the ECB weakened the euro.  The US dollar began to edge higher once again aided by a media report the Federal Reserve might take a rhetorical step toward tightening at its meeting next week. Analysts said the dollar got a lift from a Wall Street Journal report that Fed official were seriously considering dropping an assurance that short-term interest rates will stay near zero for a “considerable time.”

 Such a move would be taken as a sign the central bank was on target to start raising interest rates around the middle of next year, a view that has gained great traction since last week’s upbeat payrolls report.

The euro traded at a 28-month low Monday after the Organization for Economic Cooperation and Development and a member of the European Central Bank’s Governing Council shared forecasts which implied that the Eurozone is the weakest link in the world’s economy.

ECB Governor Ewald Nowotny expressed concerns about weakening growth in the Eurozone economy at a conference in Frankfurt Monday. He warned that Eurozone inflation could continue to fall during the first quarter of 2015, which would take the currency union dangerously close to deflation, and said he would like to see the ECB expand its balance sheet by €1 trillion.

Asian markets are trading on a negative note this morning after the US markets closed lower by at least 0.75 percent yesterday. The major reason for the tumble can be traced to the energy shares that were dragged lower after oil prices continued with the downward spiral. Investors seem to be worried about the global growth as data from China and Japan seemed to paint a gloomier picture.

In terms of currency, Asian currencies are trading on a mixed to negative note with respect to the dollar. US dollar depreciated against all the major currencies after the slump in the equity market yesterday. Japanese yen is trading higher at 120.78, and the GBP is at 1.5640 with respect to the US dollar. The AUD and NZD continued to decline trading at 0.8242 and 0.7619 respectively.

 The dollar fell against the yen and euro Monday as investors booked profits on large gains made by the U.S. currency in the Asian and European sessions in the wake of a strong November jobs report on Friday. The dollar declined 0.7% versus the Japanese currency, to 120.66 yen in late-afternoon trade. During the Asian session Monday, the greenback rose to a new seven-year high of 121.86 yen, before pulling back. Meanwhile the euro rose 0.2% to $1.2312, rising after touching its weakest level against the dollar since Aug. 10, 2012.