Dollar extends post-FOMC rally to multi-year highs vs euro: Dec 16, 2016

Market Review - 15/12/2016  22:33GMT  

Dollar extends post-FOMC rally to multi-year highs vs euro

The greenback continued its winning streak across the board and rallied against majority of its peers on Thursday due to the Federal Reserve's rate hike on Wednesday. 

Versus the Japanese yen, the greenback resumed its winning streak and rose to 117.86 in Asian morning before retreating to 117.19 in Asia. However, price found renewed buying there and rallied to a fresh 10-month peak at 118.66 in Europe. Later, dollar pared its gains and dropped to 117.66 at New York open before rebounding strongly again in New York morning. 

The single currency resumed its losing streak and dropped to 1.0468 at Asian open before trading sideways in Asia. Euro met renewed selling in European morning and tumbled to a fresh near 14-year trough at 1.0395 at New York open on dollar's broad-based strength before stabilsing in New York morning, price later hit session lowsof 1.0367 before staging a recovery. 

The British pound dropped in tandem with euro to 1.2513 at Asian open before rebounding strongly to 1.2567 ahead of European open. However, renewed selling there pressured the pair lower and price tumbled to 1.2446 at New York open. Later, cable tanked further to an intra-day low at 1.2401 in New York morning due partly to cross-selling of sterling especially vs euro, later, cable weakened to session lows of 1.2378 in tandem with euro before rebounding on short covering. 

BoE left its rate and QE total unchanged at 0.25% and 435B stg respectively. 

In other news, UK FinMin Hammond said 'we will seek maximum access possible to EU mkt for both goods n services; will maintain commitment to keep Britain a competitive place for auto industry investment; Brexit negotiations will be long n complex but will try to achieve optimal solution.' 

On the data front, the Bureau of Labor Statistics said that CPI rose to 0.2%, from 0.4% in the preceding month. Analysts had expected CPI to rise 0.2% last month. Consumer prices, excluding food and energy costs, increased by a seasonally adjusted 0.2% last month, in line with estimates and compared to the 0.1% advance seen in October.  
Core CPI increased at annualized rate of 2.1% in November, below the forecast for a gain of 2.2%. Annual core inflation rose 2.1% in October. 

Data to be released on Friday: 

Germany WPI, Italy trade balance, EU CPI, core CPI, trade balance, UK CBI trends, U.S. building permits and housing starts.