FOREX-Dollar holds firm before holidays, sterling recovers slowly

Published 23/12/2019, 10:10
© Reuters.  FOREX-Dollar holds firm before holidays, sterling recovers slowly
DXY
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* Dollar supported by Friday's U.S. economic growth data

* Pound back above $1.30 after torrid week

* Euro flat but gains vs Swedish crown

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

LONDON, Dec 23 (Reuters) - The dollar stood near two-week

highs on Monday after decent U.S. economic data was released on

Friday, while sterling recovered following last week's big drop.

The euro was little changed below $1.11. With the economic

calendar light before the holidays, analysts doubt this week

will see significant moves for major currencies.

Data published on Friday showed the U.S. economy, already

enjoying a record expansion, appears to have maintained its

moderate growth as the year ended, supported by a strong labour

market. The dollar has benefited both during bouts of risk aversion

- because it is considered a safe-haven currency - and when

markets have rallied, because the U.S. economy is outperforming

other parts of the world.

The dollar was unchanged against the euro at $1.1085

EUR=EBS . Against a basket of currencies, it edged 0.1% lower -

its index touching 97.611 .DXY - but remained near Friday's

peak, the highest since Dec. 6.

Many analysts say the dollar is the most attractive currency

of a bad bunch. U.S. yields are falling, but still better than

returns elsewhere.

"The big picture remains though that the dollar continues to

struggle for direction again the other major currencies amidst

record low volatility," MUFG analysts wrote in a note, pointing

to the modest 1.5% rise for the dollar index in 2019.

The dollar has, however, also been supported since

Washington and Beijing came to an interim trade agreement

earlier this month. China said on Monday it would lower tariffs

on products ranging from frozen pork to some type of

semiconductors next year. Currencies linked closely to the prospects for global trade

and investors' general appetite for risk rose.

The Australian dollar, which is closely linked to sentiment

towards China, rose 0.1% to $0.6913 AUD=D3 . The New Zealand

dollar gained 0.2% to $0.6618 NZD=D3 .

Sterling suffered its worst week in three years last week

after Prime Minister Boris Johnson ruled out extending the

transition period for Britain to negotiate a trade deal with the

European Union.

Early on Monday it made some gains, rising 0.3% to $1.3024

GBP=D3 . Versus the euro, sterling rose 0.2% to 85.11 pence per

euro EURGBP=D3 .

The euro gained 0.2% versus the Swedish crown to 10.444

crowns EURSEK=D3 . The Swedish currency rose to an eight-month

high last week before the Riksbank became the first major

central bank to end negative interest rates.

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