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US Dollar Breaks 100

By:
Barry Norman
Updated: Nov 23, 2015, 05:52 UTC

The US dollar topped 100 in the Asian session and is currently trading at 99.925 as the 100 triggers global sell orders. The US dollar rallied after a

US Dollar Breaks 100

US Dollar Breaks 100
US Dollar Breaks 100
The US dollar topped 100 in the Asian session and is currently trading at 99.925 as the 100 triggers global sell orders. The US dollar rallied after a week of Federal Reserve speakers endorsed a rate increase next month. The question facing the markets is the size of the increase and additional increases. Traders are now expecting a larger rate increase than a small token of 25 bps. The US nonfarm payroll report will give markets a hint at what to expect in mid-December.  The strength of the US dollar is weighing down its crosses as well as commodities and commodity currencies.

Japanese markets are on holiday today, so trading volume is much lighter than expected. The Japanese yen tumbled 37 points against the US dollar to trade at 123.20 near its highest level since October 2014 when the Bank of Japan launched its massive stimulus program Against the weak euro the jpy is trading at 130.77 flat in the morning session.

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Also in Asia, the Aussie fell 61 points to trade at 0.7178 after recovering above 72 last week aided by a small rate decrease on special loans from the PBOC. The kiwi fell in sympathy as the US dollar rallied pushing the commodity currency to 0.6516 down by 50 points.  Currency markets may experience low volumes and poor liquidity this week as traders take an extended break around the US Thanksgiving holiday on Thursday. Traders may also be unwilling to take positions ahead of the last key US data releases next week on employment and manufacturing before the Federal Reserve makes a decision on interest rates on Dec. 17, with speculation rising that it will hike. Ahead of that, the European Central Bank is due to review its policy next week, with the Reserve Bank of New Zealand up for review the following week.

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In the US, data releases will be compressed into the first half of the week due to the Thanksgiving holiday. Releases are scheduled for consumer confidence, third-quarter gross domestic product, and manufacturing, housing and durable goods orders.

The euro fell to a seven-month low as the prospect of more monetary stimulus in Europe benefited the US dollar, while activity in Asian shares was crimped by a holiday in Japan. The strength of the dollar also combined with worries about Chinese demand weighed on commodity currencies again.

The Director of the ECB, Mario Draghi, who last week offered the strongest hint yet that the ECB will unveil fresh stimulus measures at its December 3 policy meeting. The contrast with the US Federal Reserve could not be more stark as it seems destined to lift rates in December for the first time in a decade, underpinning the dollar.

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