Markets Quiet at Years End
The US dollar gained on the yen in thin year end trading and rising equities and commodities prompted a rise in risk sentiment among investors and currency traders. European trading was minimal as market participants were off for the year end holidays and UK markets were closed for a public holiday. Markets showed little reaction to the attempted terrorist attack on a US airliner. Monday, December 28th, was the last business day of the year and trading will resume January 4th. Many traders will be focusing on whether the dollar will continue recent gains going into 2010. Antje Praefcke of Commerzbank Corporates and Markets in Frankfurt stated, “Some corporates out of Japan may have been active in the yen, but it’s very, very quiet here, and I think (European) companies will have done 99.9 percent of what they had to do this year already.”
US Consumer Sentiment Report Due
The yen which is traditionally viewed as a safe haven currency was pressured by rising risk appetite. The dollar has gained about 1% against the yen in 2009 after falling nearly 19% in 2008. Market watchers are waiting for December’s US consumer confidence figures and the Standard & Poor’s Case-Shiller home price index for October. Both reports are expected to show continued recovery in the US. Many investors believe that the Fed may raise rates sooner than expected as recent data shows consistent signs of recovery. Johan Javeus of SEB stated, “Anything that points in the direction of the Federal Reserve raising interest rates earlier than previously thought will support the dollar — there has been no indication of this from the Fed but U.S. data recently has been coming in on the strong side.”
Canadian Dollar Gains on Greenback
The Canadian dollar traded at its highest against the US dollar since October and rose to its highest against the euro in thirteen months. The Canadian dollar gained 1.4% against the US dollar in December and gained for the second straight month. In October 2009 the Canadian came within three cents of parity with the greenback and is poised for a yearly gain of 17%.
