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Dec 17 - 04:55 PM

EUR/USD - COMMENT-US Recap: EUR/USD Eases As Risk Sentiment Sours

By Robert Fullem  —  Dec 17 - 02:00 PM

The dollar traded mixed on Tuesday as positions were adjusted ahead of central bank policy decisions this week including the Fed on Wednesday, while commodity currencies slid against their haven counterparts amid a drop in U.S. shares and energy prices.

Treasury yields reversed early gains, reacting to falling oil and softer-than-expected U.S. manufacturing data. Retail sales rose more than forecast in November due to a jump in the motor vehicle subcomponent.

The euro was lower after data showed the domestic business climate in Germany worsening in December, though investor sentiment improved.

Finnish ECB policymaker Olli Rehn said that euro area inflation is more clearly stabilizing at the European Central Bank's 2% target and that this helps set the stage for further interest rate reduction.

The pound was supported by data showing UK wage growth picked up more than expected in the three months to October.
UK inflation due on Wednesday precedes a Bank of England policy decision on Thursday.

The Canadian dollar weakened to nearly a five-year low against its U.S. counterpart, hurt by domestic political unrest and a wider gap between Canadian and U.S. bond yields after data showed a surprise easing of Canadian inflation.

Chinese leaders agreed last week to raise the budget deficit to 4% of gross domestic product next year, sources say.

Treasury yields were lower by 1-2 basis points as the curve flattened.
The 2s-10s curve dipped 1 basis point to +13.9bp.

The S&P 500 fell 0.40% amid lower energy and bank shares.

Oil slid 1.2% on demand worries following the release of negative economic news from Germany and China.

Gold slipped 0.20% amid growing expectations that Fed rate cuts in 2025 will become more gradual.

Copper fell 1.24% on worries about China demand.

Heading toward the close: EUR/USD -0.20%, USD/JPY +0.56%, GBP/USD +0.25%, AUD/USD -0.49%, DXY +0.04%, EUR/JPY -0.70%, GBP/JPY -0.32%, AUD/JPY -1.09%.




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Source:
London Stock Exchange Group | Thomson Reuters

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