FX Roundup: Dollar maintains strong footing

The dollar maintained its strong momentum on Monday, posting upticks against major currency crosses with the US Federal Reserve set for a policy meeting on December 15-16.

At 1621 GMT, the dollar rose against the yen by 0.11% changing hands at JPY123.24. Concurrently, the pound fell 0.28% against the dollar exchanging at $1.5069, while the euro fell 0.32% to change hands at $1.0846, inching away from parity against the greenback.

Continuing with major crosses, the greenback rose 0.57% against the Swiss franc exchanging at CHF1.0021, still staying above parity in the dollar’s favour during late European trading. Meanwhile, the pound corrected against the euro fetching €1.3894 down 0.04%, following on from the European Central Bank meeting last week.

Kit Juckes, head of forex at Societe Generale, said, “The currency stars that shone brightest in the years of easy Fed policy are being dragged, one by one, into a black hole. Recession will eventually drag the dollar down too, but not in 2016. Just don't look down! For now, volatility and more frequent corrections are inevitable.”

“The imminent start of the Fed rate-hiking cycle will be sugar-coated in dovish reassurances about the speed of tightening. The market expects as much, but history warns us that the dollar rallies ahead of the first rate hike and often weakens afterwards. This presents a chance to buy, as monetary policy divergence will still be the big theme of 2016.”

Elsewhere, the dollar also rose significantly against selected commodity-linked currencies; up 1.75% against the Norwegian Krone changing hands at NOK8.6611, alongside upticks of 1.09%, 3.44% and 1.51% against the Canadian dollar, Colombian peso and Mexican peso changing hands at CAD$1.3504, COP$3,312.17 and MXN16.9041 respectively.

Finally, the Australian dollar fell against its US counterpart by 0.94% changing hands at US$0.7270, while the New Zealand dollar fell 1.45% changing hands at US$0.6649.