SMR: Dollar down vs. most rivals in thin trade after China rate hike
Forex Pros – The U.S. dollar was down against most of its major rivals on Monday, in choppy, holiday-thinned trade, after China unexpectedly raised its benchmark interest rate over the weekend in an effort to cool inflation.
Over the Christmas weekend, the People’s Bank of China announced on its website that it increased its benchmark deposit and lending rates by 25 basis points for the second time in ten weeks. The widely expected move was aimed at reining inflation, which soared to a 28-month high of 5.1% in November.
During European afternoon trade, the greenback was down against the euro, with EUR/USD jumping 0.37% to hit 1.3161.
The greenback was also down against the pound, with GBP/USD inching up 0.03% to hit 1.5445. Earlier in the day, industry data showed that house prices in the U.K. declined for the sixth consecutive month in December.
Meanwhile, the U.S. dollar was up against the yen and Swiss franc, with USD/JPY easing up 0.01% to hit 82.84, while USD/CHF added 0.18% to hit 0.9627.
Earlier Monday, the minutes of the most recent meeting of the Bank of Japan’s Monetary Policy Committee revealed that the BoJ needed to continue to monitor the effects of the rising yen on exporters, with one board member warning that the country’s gross domestic product could contract in the fourth quarter as a result of the strengthening yen.
Meanwhile, the greenback was down against its Australian, New Zealand and Canadian counterparts, with AUD/USD climbing 0.15% to hit 1.0032, NZD/USD rising 0.06% to hit 0.7474, and USD/CAD dropping 0.01% to hit 1.0073.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.28%.
Investors expect trading to be quiet throughout the day, with markets in the U.K., Canada, New Zealand and Australia closed for holiday and many traders in the U.S. on year-end leave.
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