After a few wild sessions following the Federal Reserve’s rate hike decision, the greenback seems to be slipping into “holiday trading” characterized by low liquidity and a lack of conviction by traders to push the currency out of recent ranges. Despite a pullback in European equities and lower US stock futures, commodity prices remain elevated. Despite higher oil and metal prices, commodity-based currencies such as the Australian dollar are unchanged against the greenback this morning.
Existing home sales for the U.S. are due out at 10 a.m. While a strong print could give the greenback a small boost, the report is likely to be inconsequential. Tomorrow’s docket has a better chance to spur the dollar’s recent rally. Durable goods, GDP and personal income are all due out at 8:30 a.m. tomorrow.
Despite falling European equities and soft economic data, the Euro was able to recover modestly overnight. The beleaguered currency fell to a fresh 13-year low during yesterday session, before finding apparent technical support overnight. Market participants are likely to remain focused on the Italian banking sector, which should continue to put downward pressure on the common currency. Shares of the world’s oldest bank, Monte Dei Pachi were suspended from trading again today. The Italian government approved an increase in the public debt limit today in order to provide support to struggling banks.
The Swedish krona was the biggest mover overnight, gaining over 1.0% against the U.S. dollar and reaching its strongest level in more than two months against the Euro. The Scandinavian currency found support after the Swedish central bank’s decision to extend monetary stimulus was seen as hawkish. While Riksbank did announce an extension of its bond-buying program, the central bank said that the move was met with internal opposition. The apparent disagreement reduces the likelihood of additional easing, thus boosting the krona.