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US dollar weakens in holiday-thinned trade

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The US dollar weakened a bit against the euro and other major currencies Wednesday in modest trade.

[NEW YORK] The US dollar weakened a bit against the euro and other major currencies Wednesday in modest trade.

"Currency market moves are lacking conviction," said Nick Bennenbroek, head of currency strategy at Wells Fargo Securities, noting that the United States and Canada were both observing holidays.

"The Veterans Day holiday in the United States has bond markets closed, and thus, one of the biggest drivers of US dollar strength in recent weeks - shifting interest rate differentials - on pause," said Christopher Vecchio, currency analyst at DailyFX.

The euro rebounded from a Tuesday fall that had taken the shared currency to US$1.0675, its weakest level since late April.

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The euro rose slightly, to US$1.0741 around 2200 GMT from US$1.0727 at the same time Tuesday.

But the bump-up for the euro looked set to be transitory after the blockbuster US jobs report last Friday increased the odds that the Federal Reserve will raise interest rates for the first time in nine years in December.

"Currency markets are focused on the potential divergence in monetary policy at year's end. Even as the Fed will likely begin removing monetary stimulus, the European Central Bank is gearing up to do more," said Moody's Analytics.

AFP

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