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The dollar was steady versus other major currencies Friday morning, consolidating its recent gains versus the euro and yen while easing a bit versus the sterling.
A combination of factors helped the dollar spring to life this week, following a brutal stretch that took it to a 16-month low late in November. Since then, a shift in interest rate expectations and increased risk aversion has helped the dollar rise to its highest levels since September against the euro.
Conventional wisdom for most of the autumn was that the interest rate gap between the EU and US would widen, with the European Central Bank raising its key rate from one percent in the coming months. However, with the Euro zone economy lagging and a number a member states suffering debt problems, policy makers may have a hard time removing support measures designed during the throes of the recession.
The dollar held near 1.4350 versus the euro this morning, just off of yesterday's 3-month high of 1.4303. The buck has picked up 8 cents since hitting a 16-month low around 1.51 about 3 weeks ago.
Latest survey results released Friday showed that German business confidence continued to improve in December. Business confidence improved further to 94.7 in December, the Munich-based Ifo Institute for Economic Research said.
The buck touched a 2-week high versus the yen, rising to 90.46 after seeing some weakness overnight.
The Bank of Japan maintained its key interest rate near zero Friday as it took a 'wait and watch stance' after introducing fund-supplying measures in the first week of December.
The central bank retained its assessment that the Japanese economy is picking up mainly due to various policy measures taken at home and abroad, although there is not yet sufficient momentum to support a self-sustaining recovery in domestic private demand.
The buck leveled off versus the sterling this morning, easing a penny from yesterday's two-month high of 1.6078.
The economic calendar will be light Friday, with traders likely using the session to re-evaluate their positions in the markets while re-examining this week's influx of economic data.
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