Dollar was steady ahead of year-end holidays

Forex outlook:

The dollar traded steady against the euro and the yen on Thursday as trade volume was low in the market ahead of the holidays. The GDP report showing the U.S. economy grew in the third quarter at a slightly slower pace than previously estimated had little impact on the dollar, while the Philadelphia Fed business index showed a sharp decline in mid-Atlantic area factory activity sparked a brief dollar decline versus the euro that was later reversed. Some analysts said Thursday’s data fits with other signs of slower U.S. growth in the months ahead and could cause trouble for the dollar after the holidays.
The yen rose against the euro, rebounding from a record low, after Japan's Vice Finance Minister Hideto Fujii said excessive moves in currencies are undesirable. Fujii's comments led investors to pare so-called carry trades, where they borrow in yen to buy higher-yielding assets in other currencies. The yen has dropped 10 percent versus the euro in 2006. The Japanese currency advanced to 155.88 per euro, rebounding from an all-time low of 156.43 set earlier. It traded at 118.40 per dollar from 118.46. The euro traded at $1.3168 per dollar, from $1.3174. The yen's decline has boosted Japanese exports, which unexpectedly accelerated in November, according to a Ministry of Finance’s trade balance report.
The pound held near its highest in six weeks against the euro after the GDP report showed the U.K. economy expanded in the third quarter at the fastest annual pace in two years, increasing speculation the Bank of England will keep raising interest rates. Gains for the pound may be limited on expectations the U.K.'s interest-rate advantage against the euro will narrow next year as the European Central Bank keeps raising interest rates.

As today is the last trading day before Christmas holiday, investors are expecting the U.S. Personal Consumption Expenditures (PCE) Price Index to be released which measures the rate of inflation experienced by consumers when purchasing goods and services. As well as the U.S. durable goods orders data is due today.

Gold: Gold fell for the second straight day, traded in a tight range on Thursday on speculation the euro's rally against the dollar has stalled, reducing the precious metal's appeal as an alternative investment. Trading was seen remaining thin ahead of year-end holidays. Gold futures fell 0.4 percent, to $621.60 an ounce while spot gold was trading below $620 an ounce.

Crude Oil: Crude oil fell from a three-month high as mild weather in most of the U.S. signaled decreased demand for heating oil. Crude oil fell $1.06 to $62.66 a barrel after touched $64.15 on Wednesday. Oil Prices are up 7 percent from a year ago. Political tensions in oil-producing countries have also been largely discounted by the market. Nigeria, Africa's largest oil producer, cut about a quarter of its exports following violence in production areas, and further unrest is anticipated in the run-up to presidential elections in April.

 
Pool position: