European Currencies Rally, Dollar-Bloc Heavy
This week’s pattern remainsintact. The US dollar continues to trend lower against the European
currencies, but is firmer within the dollar-bloc and against the yen.
Spanish and Italian bond yields are lower, while the long-end of the
Japanese curve is heavy. Equity markets are finishing the year with a
firm note, with board gains in Asian, with the notable exception of
Shanghai and Jakarta, and in Europe, with the exception of Stockholm.
Theeuro is at 7-month highs today, pushing toward $1.3300. The next target
is near $1.3385. Sterling has been bid to near the year’s high set
in late September just above $1.6300. There is little chart resistance
until closer to $1.6500. The dollar’s slide against the Swiss franc
has extended to CHF0.91 and appears headed for CHF0.9000.
The dollar-bloc is not participating in this move against the greenback.
This week, for example, the New Zealand dollar has fallen as almost as
much as the yen (1.03% and 1.08% respectively). The Australian and
Canadian dollars are off 0.04% and 0.57% respectively.