The U.S. dollar traded in a volatile range overnight, but opened this morning largely unchanged against the majority of its counterparts. Indeed, the Dollar Index, which Intercontinental Exchange Inc. uses to track the greenback against its six largest partners held flat from yesterday, having declined 0.4% this week. Meanwhile, the economic docket showed that the U.S. trade deficit widened more than forecast in November as American exports declined and companies stepped up imports. Exports from the U.S. declined to a four-month low, depressed by a rising dollar and weakening demand in Europe. Later this morning, the University of Michigan consumer confidence report is expected to show that confidence improved this month. Economists estimate a reading of 71.5, up from 69.9 in the month prior.
After gaining yesterday, the Euro erased its gains overnight as the currency struggles to find a definitive direction in the New Year as European leaders continue to attempt to resolve the region’s debt crisis. Nevertheless, the Euro is still headed for its first weekly gain against the U.S. dollar in six weeks, with much of the momentum coming after Spain sold nearly twice the maximum target at a bond auction yesterday. The Euro also found modest support yesterday after European Central Bank President Mario Draghi said the central bank’s massive injection of cash into the financial system last month is beginning to flow through into credit markets. “There are tentative signs of stabilization of economic activity at low levels,” he said. There was no major economic data released in the Euro-zone today.
The British pound remained in tight ranges overnight after a day of trading that saw the sterling depreciate against its major counterparts as the euro-zone was able to relieve some of its pressure. With the euro concerns at least temporarily on the backburner, the focus can shift squarely to consumer-price growth, which BoE expects to rapidly decline year. Today the PPI numbers were encouraging, as the Office for National Statistics released the cost of factory goods annual price growth slowed to 4.8%, from 5.4% in November.
