Dollar recovers in light trading

Published: 26 Dec at 5 AM Tags: Euro, Dollar,

The dollar has clawed back from two days of losses against the euro and the yen after light trading because of the holidays.

Business is unlikely to be back to normal until after the weekend as the markets in Singapore, Hong Kong and Australia remain closed. Friday also sees the closure of the market in the UK, although it is business as usual in New York.

The dollar is up 0.2 per cent against the yen at 120.350 after dipping to 120.005 yen. Earlier in the week the greenback climbed as high as 120.800 yen. Analysts believe the yen will become weaker as economic data from the US improves.

The euro dropped 0.1 per cent to $1.2209. This is close to Tuesday’s 28-month low of $1.2165. This was caused by positive GDP data released by the US. The robust figures indicate the US economy is well on the road to recovery. This makes it more likely that the Federal Reserve will push ahead with its intension to hike interest rates next year.

In contrast the economic situation in Europe and Japan is likely to lead to central banks sticking to a loose monetary policy in an effort to spur growth.