The dollar remains in its consolidation phase today. Current market conditions show relatively narrow ranges, particularly with the Japanese yen, where the potential for intervention has contributed to stabilizing the exchange rate. The Bank of Japan is scheduled to convene next week. While reports indicate that the inflationary effects of the yen’s depreciation will be considered, the swaps market reflects a virtually negligible probability of a rate increase until at least the second quarter. In the meantime, a number of NATO allies are sending a limited contingent of forces to Greenland at Denmark’s request, an initiative that French President Macron has referred to as “Operation Arctic Endurance.” President Trump has signaled that following the investigation, the US will refrain from imposing a tariff on critical minerals, causing a notable impact on the metals market. Following the receipt of “assurances” that Tehran will not target protesters, Trump indicated that he will hold off on any actions regarding Iran. This alleviated certain concerns within the oil market.
The euro experienced fluctuations between approximately $1.1620 and $1.1700 on Monday, maintaining this range consistently since then. It neared Monday’s low today but remained above $1.1625. Options for 900 million euros are set to expire today at $1.1650, with the session high just below that level. The French government successfully navigated two no-confidence votes yesterday, aided by the support of the Socialists. The matter at hand was the EU trade agreement with Mercosur, which includes Brazil, Argentina, Uruguay, and Paraguay. Prime Minister Lecornu continues to encounter significant challenges regarding the approval of this year’s budget, which remains pending in parliament. The yen has shown signs of stabilization, aided by yesterday’s heightened warning from the finance ministry. Today’s reports indicate that the Bank of Japan is attuned to the inflationary consequences stemming from the yen’s weakness. The dollar is experiencing a stable trading range, fluctuating between approximately JPY158.25 and JPY158.75. Options for 1.45 billion at JPY 159 expire today, and a smaller amount of nearly 400 million at JPY 159.50 also rolls off.
Despite a solid November GDP growth of 0.3%, sterling is facing challenges. It declined to a new three-day low close to $1.3415. Monday’s low was approximately $1.3390, a level that has not been observed since just prior to Christmas. The topside encountered a minor halt just beneath $1.3450, coinciding with options for GBP1.3 billion at $1.3450 set to expire today. The Canadian dollar has reached a three-day low, with the U.S. dollar rising above CAD1.3900. On Monday, the peak reached nearly CAD1.3920. The week’s low was established on Tuesday around CAD1.3855. Slightly below that level, at CAD1.3850, there are $1.7 billion in options set to expire today. Prime Minister Carney is currently in China and, similar to the EU, may negotiate a trade agreement with Beijing that encompasses electric vehicles. Canada’s oil may serve as an alternative to Venezuelan oil for China.
The Australian dollar experienced a decline, reaching a new weekly low just above $0.6665, before making a recovery to test the $0.6700 region. It has consistently traded above $0.6700 during each session this week; however, it has not managed to close above this level since Monday. Last week’s peak approached $0.6765, while the $0.6715 level represents approximately the midpoint recovery from today’s low.