Dollar steadies against euro, awaits US data for direction
TOKYO: The dollar steadied against the euro on Tuesday after dipping against the common currency on an inconclusive Spanish election result, while traders looked to U.S. data later in the day for direction.
The euro was steady at $1.0910, having risen about 0.4 percent overnight on short covering after Sunday’s national election in Spain. The gains were limited as no party won a clear mandate to govern, raising concerns about economic reforms in the euro zone’s fourth largest economy.
“The euro’s rise took place in a thin market and since it was likely driven by position adjustments, the currency’s advances do not look sustainable,” wrote Masafumi Yamamoto, chief forex strategist at Mizuho Securities in Tokyo.
The dollar was little changed at 121.24 yen, having spent the previous day in a narrow range of 121.16-121.50.
The approaching holiday season that will shut much of the world’s key financial markets limited activity and kept currencies bound in tight ranges.
With the U.S. Federal Reserve’s much-anticipated interest rate hike out of the way, most traders were content to sit on their hands as there was very little in the way of market-moving events in a holiday-heavy week.
Markets will look for trading catalysts from U.S. data, including revised third quarter GDP and housing price indicators, due later in the session.
With crude oil prices dropping to 11-year lows, the Canadian dollar remained under pressure. The loonie traded at C$1.3954 per dollar, within reach of a 11-year trough of C$1.4003 struck on Friday.
The Australian dollar, another commodity currency, fared slightly better. The Aussie was up 0.2 percent at $0.7203 , putting further distance between a one-month low of $0.7097 hit last week after the Fed’s rate hike shored up the greenback.