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24/12/15 Market notes

U.S. dollar drifts lower against euro, yen in pre-Christmas trade

U.S. dollar drifts lower against euro, yen in pre-Christmas trade

Investing.com – The dollar edged lower against the euro and yen in subdued trade on Thursday, with moves likely to remain limited ahead of the Christmas holiday.

A pedestrian walks past a money exchange bureau with a board displaying the exchange rate of the U.S. dollar against the Chilean Peso, in downtown Santiago October 30, 2014. REUTERS/Ivan Alvarado

A pedestrian walks past a money exchange bureau with a board displaying the exchange rate of the U.S. dollar against the Chilean Peso, in downtown Santiago October 30, 2014. REUTERS/Ivan Alvarado

Trading volumes are expected to remain light, with much of the Western world already shuttered for the Christmas and year-end holidays.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.27% at 98.12 during European morning hours.

The index, which has fallen back to levels seen before the Federal Reserve raised interest rates on December 17, remains well off last week’s two-week high of 99.33.

The greenback weakened followed the release of mixed U.S. economic data on Wednesday. Orders for U.S. core capital goods, a key barometer of private-sector business investment, declined 0.4% last month, while shipments of core capital goods, a category used to calculate quarterly economic growth, slumped 0.5%.

However, separate reports showed that personal spending rose for the eighth straight month in November, while consumer sentiment improved to a five-month high in December.

With the first U.S. rate hike since 2006 out of the way, the focus is now on the pace of future rate increases. The Fed, from its forecasts, is anticipating four rate hikes next year. However, the Fed funds futures currently suggests there will be just two rate increases, in June and December.

The dollar slid against the euro, with EUR/USD gaining 0.37% to 1.0952. Against the yen, the greenback dipped 0.45% to 120.38 (USD/JPY).

Trading volumes are expected to remain light as many traders already closed books before the end of the year, reducing liquidity in the market and increasing volatility. U.S. markets close early Thursday, Christmas Eve, and are shut Friday for Christmas Day.

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03/03/15 Market notes

Iran’s Khamenei Warns of Repercussions for Saudi Cleric’s Death

Iran’s Khamenei Warns of Repercussions for Saudi Cleric’s Death

Iran’s Supreme Leader Ayatollah Ali Khamenei warned of repercussions after Saudi Arabia executed a prominent Shiite cleric critical of the kingdom’s Sunni rulers.

“The divine hand of revenge will take the Saudi politicians by the throat,” Khamenei, Iran’s highest authority, said on Sunday. Cleric Nimr al-Nimr “was neither encouraging people to armed protests, nor plotting secretly, all he did was to openly criticize.”

Iranian protesters armed with rocks and firebombs attacked the Saudi embassy in Tehran on Saturday and set parts of the building on fire after the execution of al-Nimr, an outspoken critic of the kingdom’s treatment of its Shiite minority. A small group stormed the premises and several people were arrested, Tehran police chief Hossein Sajedinia told the state-run Islamic Students’ News Agency.

Al-Nimr’s execution and the ensuing protests further strained ties between Saudi Arabia and Shiite-ruled Iran. The two regional powers are on opposite sides of Middle East conflicts from Syria to Yemen. Saudi Arabia is also concerned about Iran’s growing influence after last year’s nuclear accord with world powers.

Increase Tensions

The cleric was one of 47 executed across Saudi Arabia on Saturday for terrorism-related offenses. The men were convicted of crimes including bombings that targeted the traffic department and interior ministry in Riyadh, plots to attack military airports, and other strikes on security forces.

“This sends a message of resolve and firmness in Saudi Arabia’s policy of confrontation with its two enemies, mainly al-Qaeda and Iran,” Ibrahim Fraihat, senior foreign policy fellow at the Brookings Doha Center, said in an interview. “It will also increase tensions inside Saudi Arabia because it gives the Shiite community new grievances and symbols to rally around within the country.”

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