Dollar weakens vs G4 currencies on fall in US stocks and treasury yields ahead of Fed meeting

Market Review - 18/12/18 03:41GMT

Dollar weakens vs G4 currencies on fall in US stocks and treasury yields ahead of Fed meeting

The greenback fell against majority of its peers on Monday on risk aversion as global stocks closed in the red and as fears of a potential U.S. government shutdown increased. Dollar also remained under pressure as investors remained cautious ahead of the Federal Reserve's 2-day meeting on Tuesday.  
  
Versus the Japanese yen, although dollar traded with a firm bias in Asia and gained to 113.52 in Asia, price met renewed selling there and dropped in European session. Intra-day decline accelerated at New York open on cross-buying in jpy and fell to session lows of 112.69 in New York due partly to downbeat U.S. data as well as safe-haven yen buying on renewed weakness in the Dow.  
  
Home builder confidence unexpectedly worsened in December, falling to a three-and-a-half-year low as concerns over housing affordability persisted.  
  
The National Association of Hombuilder's housing market index dropped to 56 this month, from 60 in November. That was its lowest level since May 2015. Economists had expected an increase to 61.  
  
The single currency traded with a firm bias in Asia and steadily gained in Europe to 1.1354 ahead of New York open. However, euro pared its gains and retreated to 1.1330 in New York morning before climbing to session highs of 1.1358.  
  
The British pound opened higher and gained to 1.2610 (Reuters) in New Zealand before retreating to 1.2573 in Australia. Cable then found renewed buying and rose to session highs at 1.2647 in Europe on usd's broad-based weakness before retreating sharply to 1.2593 in New York morning on renewed Brexit concerns.  
  
Reuters reported Britain's main opposition Labour Party said on Monday Prime Minister Theresa May had only offered a date for a new vote on her Brexit deal because it had threatened to call for a motion of no confidence in her.  
  
"The prime minister has been forced to bring her botched deal back to Parliament under threat of a motion of no confidence in her," a spokesman said.  
  
"We will not let her cynically run down the clock to create the false choice between her botched deal and no deal. It is disgraceful that a month has been wasted. We were due to vote on 11 December and there can be no further attempts to dodge accountability to parliament."  
  
In other news, Reuters later reported British Prime Minister Theresa May said on Monday that she intended to re-schedule a delayed vote in parliament on her Brexit plan in the week starting on Jan. 14.  
  
"Many members of this house are concerned that we need to take a decision soon," May told lawmakers in the House of Commons. "We intend to return to the 'Meaningful Vote' debate in the week commencing seventh of January, and hold the vote the following week."  
  
On the data front, euro zone consumer price inflation for November was unexpectedly revised lower on Monday, adding to skepticism that the European Central Bank will be able to move ahead with an interest rate hike in 2019.  
  
The bloc's statistics agency Eurostat said that CPI rose 1.9% in November from the same month a year earlier. Consensus had expected no change from the initial estimate of 2.0%.   
  
Data to be released on Tuesday:  
  
New Zealand current account, GDT price index, Germany wholesale price index, Ifo business climate, Ifo current conditions, Ifo expectations, Canada manufacturing sales, and U.S. building permits, housing starts, redbook.