FX Roundup: Dollar holds gains against major crosses

The dollar held on to gains against major currency crosses on Friday, as the weekend approached.

At 1611 GMT, the greenback was up against the yen by 0.16% changing hands at JPY122.77. Concurrently, the pound fell 0.31% against the dollar exchanging at $1.5055, while the euro fell 0.13% to change hands at $1.0596, inching ever closer to parity against the US currency.

Continuing with major crosses, the greenback rose 0.63% against the Swiss franc exchanging at CHF1.0302, staying above parity in its favour following mild trading stateside owing to it being a half-day on the markets after the US Thanksgiving holiday.

Meanwhile the pound sterling traded marginally lower against the euro fetching €1.4212 down 0.14% in wake of the UK spending review that saw the government announce a raft of changes to the way it manages the country’s budget deficit.

Jane Foley, senior FX strategist at Rabobank, said, “If wage inflation continues to push higher and UK consumption demand increases, the Bank of England would have little option but to resort to an interest rate hike.

“While we expect the BoE to remain cautious on policy moves in the coming months, we expect EUR/GBP to continue trending lower on the back of ECB policy measures towards 0.68 on a 9-12 month view (well below the current 070+ level).”

The dollar also traded higher against selected commodity-linked currencies, including the Norwegian Krone by 0.21% changing hands at NOK8.6813, alongside gains of 0.16%, 0.46% and 0.52% against the Colombian peso, Brazilian real and Canadian dollar, changing hands at COP$3,100.31, BRL3.7607 and CAD$1.3363 respectively.

Finally, the Australian dollar fell against its US counterpart by 0.44% changing hands at US$0.7193, while the New Zealand dollar fell 0.61% changing hands at US$0.6531.

Kit Juckes, head of forex at Societe Generale, said, “As far emerging markets go, the path of least-resistance is for additional dollar strength. Trading strategies will need to be more nimble than last year and timing will be critical.

“We are bearish on Korean won and Taiwan dollar as the risk of Chinese devaluation hangs over the market (and then happens). It’s been a quiet trading day otherwise, China’s SDR entry and the ECB next week will give us a very lively start to December.”