After a quiet start to the week, the U.S. dollar is under pressure against the majority of its counterparts this morning.
The dollar was quiet yesterday but sold off against commodity-based currencies as news broke that a Libyan pipeline exploded.
There was only second tier-data released yesterday and we do not expect much to come from today’s docket. Consumer confidence and existing home sales will cross the wires at 10 a.m.
We can expect light holiday trading throughout the week. Indeed, volatility remains near multi-year lows. However, end-of-year position squaring could leave to choppy trading conditions.
The Euro pushed higher as Europeans came back to work after the long weekend. The Euro is currently near its highs of recent ranges but has been unable to break significantly higher. Many analysts believe that the common currency is poised for a strong year against the U.S. dollar as policy divergence becomes less of a pro-dollar factor.
Commodity-based currencies such as the Canadian, Australian and New Zealand dollars all advanced overnight. Energy driven currencies such as the “loonie” started their rally yesterday as the price of oil popped to its highest level since 2015 on the news of possible supply disruptions.
We expect to see some action in USD/CAD early in the year as OIS pricing is roughly a toss-up as to whether or not the Canadian central bank will boost rates in January.