Dollar rises on short covering ahead of FOMC meeting

Market Review - 30/01/2018   00:54GMT  

Dollar rises on short covering ahead of FOMC meeting

The greenback was broadly higher against majority of its peers on Monday ahead of FOMC rate decision on Wednesday as well as rising U.S. Treasury yields.  
  
Versus the Japanese yen, dollar finally gained respite in Asia on Monday after falling for four consecutive sessions last week. Price met renewed initial buying at 108.51 and ratcheted higher to 109.05 in Europe, then to session highs of 109.20 in New York morning on usd's strength and rising U.S. Treasury yieldsm benchmark 10-year yields climbed to a fresh 3-year high of 2.7123%.  
  
Euro briefly fell to 1.2385 in Asia morning and despite staging a rebound to 1.2428 in Europe, broad-based selling in euro sent the pair falling below last Thursday's low at 1.2365 to session lows of 1.2338 in New York due to renewed concerns on German coalition talk. However, broad-bassd pullback in the usd helped euro to stage a rebound to 1.2390 in New York afternoon.  
  
Reuters reported the leader of Germany's Social Democrats (SPD) played down hopes on Monday for swift progress in coalition talks with Chancellor Angela Merkel's conservatives, an SPD source said, amid continued disagreement over several issues including refugees.   
  
The British pound met renewed selling at 1.4158 at Asian open and retreated to 1.4111. Intra-day decline accelerated on cross-selling of sterling vs euro and tumbled to session lows at 1.4026 ahead of NY open. However, cable later rebounded in tandem with euro to 1.4080 in New York.  
  
In other news, Reuters reported the European Union agreed on Monday to offer Britain a 21-month transition period after Brexit next year during which it will keep the "status quo" of EU membership without getting a vote, officials said.  
  
On the data front, the Commerce Department said on Monday that consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased 0.4 percent last month after an upwardly revised 0.8 percent increase in November.  
  
Data to be released on Tuesday:  
  
New Zealand trade balance, imports, exports, Japan household spending, unemployment rate, retail sales, Australia NAB business conditions, France GDP, consumer spending, Germany CPI, HICP, Swiss trade balance, import, export, KOF indicator, Italy business condition, consumer confidence, UK mortgage approvals, EU GDP, business climate, economic sentiment, industrial sentiment, service sentiment, consumer confidence, and U.S. redbook, Case-Shiller home price indices, consumer confidence