Dollar Rises a Sixth Day, Pound Drops After UK GDP
The greenback traded higher versus most of its Group-of-10 peers, extending its weekly advance, while the pound fell to its lowest in nearly two weeks after UK GDP data was released.
The Bloomberg Dollar Spot Index rises 0.1%, set for a weekly advance of 0.8%; it heads for its longest winning streak in two months.
Treasury 10-year yields steady at 4.32% after advancing six basis points Thursday.
Spot and options volumes run around 70%-80% of recent averages, Europe-based traders say; some hedge funds were seen adding fresh topside dollar exposure in recent days, albeit in small sizes, at the back of a favorable US macro backdrop.
GBP/USD drops as much as 0.4% to 1.2619, lowest since Dec. 2; Britain’s economy contracted for a second straight month in October as consumers braced for a painful budget, while economists had expected a 0.1% gain.
One-week risk reversals trade at 17 basis points, puts over calls, just two basis points richer on the day; cable is down 0.9% this week.
The Bank of England will likely stick to the script at its final meeting of the year, keeping rates steady and signaling that it intends to ease gradually through 2025, according to Bloomberg Economics.
USD/JPY heads for its best week in more than two months after Reuters reported that the BOJ is leaning toward skipping a rate hike in December; up a fifth day, longest winning streak since June.
Pair rises 0.4% to 153.26, highest since Nov. 26; confidence among Japan’s large firms edged up in December, according to the BOJ’s quarterly Tankan report Friday.
EUR/USD is little changed at 1.0469, versus 1.0453 day low; it’s down a second week.
Governing Council member Francois Villeroy de Galhau said the ECB will lower borrowing costs further in 2025 and investors’ bets on more than 100 basis points of easing look reasonable, adding that the central bank is still significantly above the neutral level at which rates are neither restrictive nor accommodative.
Governing Council member Martins Kazaks said the size of interest-rate reductions could be increased should economic developments warrant it.
The Australian and New Zealand dollars fell as investors weighed the outcome of a two-day conference in Beijing to boost public borrowing and spending next year. While the tone of the meeting appeared supportive for growth, a lack of concrete details on policies is denting demand for China-sensitive assets like the Aussie.
AUD/USD edges down 0.1% to 0.6364; NZD/USD slips 0.2% to 0.5761.
Source : Bloomberg
