MW: Dollar hovers near three-month high against euro
By William L. Watts, MarketWatch
LONDON (MarketWatch) -- The dollar traded mostly steady Wednesday but hovered near a three-month high against the euro ahead of a relatively heavy round of U.S. economic data.
The dollar index (DXY 78.10, -0.16, -0.20%) , a measure of the greenback against a trade-weighted basket of major currencies, stood at 78.240, little changed from 78.245 late Tuesday.
Strategists at UniCredit MIB in Milan said thin trading conditions in the runup to the Christmas holiday are likely to further reinforce the dollar's.
"With the euro [continuing] to suffer from stronger U.S. fundamentals, there is risk that the heavy data calendar mainly today and after Xmas may drag [the euro] directly toward $1.40," they said in a research note.
The euro, which had traded above the $1.50 mark earlier this month, fetched $1.4257 in recent action, little moved from $1.4253 seen late Tuesday in North American trading.
It was a similar story for the Japanese yen, with the dollar changing hands at 91.76 yen.
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The U.S. currency had marched higher during Tuesday's session, gaining in the wake of strong U.S. sales of existing homes during November and elements of the the final revision to third-quarter gross domestic product data that suggested stronger growth ahead.
On Wednesday, traders will digest U.S. personal income and consumer spending data for November, set for release at 8:30 a.m. Eastern, as well as the final reading of the University of Michigan's December consumer sentiment index and November new home sales at 10 a.m.
Analysts surveyed by MarketWatch are expecting a 0.4% rise in personal income and a 0.7% rise in consumer spending. The December consumer sentiment is expected to come in at a level of 74, while analysts are expecting a rise of 421,000 in new-home sales for November.
U.S. stock index futures pointed to a higher open for Wall Street, following on gains scored in the wake of Tuesday's economic data. Read Indications.
Game on
Analysts noted the inverse relationship between equities and the dollar appears to have weakened in recent sessions.
"The negative correlation between the Dow and the U.S. dollar that was in place for much of this year, has been temporarily derailed with global fund managers having closed their books and professional traders now probing the extent of the dollar's newfound strength," said Michael Woolfolk, currency strategist at Bank of New York Mellon.
Meanwhile, the British pound slipped 0.1% to trade at $1.5940. The euro rose 0.2% to fetch 89.40 pence.
Minutes of the Bank of England's Dec. 9-10 policy meeting released Wednesday offered few surprises.
The minutes showed unanimity in decisions to hold the central bank's key lending rate unchanged at a record-low 0.5% and to maintain the size of its money-creating asset-purchase program at 200 billion pounds ($318.7 billion). Read about the BOE minutes.
