US Dollar Loses Ground Against Pound, Commodity-Peers
The US dollar continued to lose ground against some of its major peers, as investors began closing their books for the end of the year.
The US dollar index, which tracks the performance of the greenback against several of its major peers, rose more than 0.1 percent to 80.12. The US dollar made up ground against the euro, reversing the common currency’s prior gain. The EURUSD pair fell 26 pips to 1.3767 after hitting a fresh two-year high following the Christmas holiday.
The greenback was less fortunate against the British pound, which continued its onslaught in the final session of 2013. Renewed confidence in the global economy has bolstered sentiment toward the British pound, which quickly became one of 2013’s best performers. The GBPUSD soared 78 pips to 1.6566, surpassing the initial resistance at 1.6556. The trend index is strongly bullish, with the next resistances found at 1.6597 and 1.6693.
The commodity peers strengthened for the second straight session on improved global sentiment. The Australian dollar gained 22 pips to 0.8927 US. In North America, the loonie regained 21 pips, sending the USDCAD pair to 1.0629. The commodity peers were among 2013’s worst performers, as global volatility and weak commodity prices drove down the value of the Aussie and loonie.
The US dollar extended its gains against the Japanese yen, advancing 20 pips to overtake the initial resistance at 1.0527 yen.
The market’s reaction to the Federal Reserve’s decision to taper asset purchases has been rather subdued. Market participants are still trying to determine the path of monetary policy, and whether incoming Fed Chair Janet Yellen will favour accommodative policies in 2014.
The Fed pared bond purchases by $10 billion at its December policy meetings. Beginning in January, the central bank will ease $75 billion into the financial markets on a monthly basis.
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