US Dollar firmer as weak Japanese data weighs on yen

The US dollar edged higher in Tuesday’s Asian session as volumes remained thin in the last trading week of the year. With the London market still closed today due to the Christmas bank holiday, it’s expected to be another quiet day. However, bargain hunting lifted the dollar higher versus the yen in Asian trading, helping it move away from one-week lows touched yesterday.

The greenback lost some momentum last week following worse-than-expected personal income and consumption data for November out of the US. Nervousness about Trump’s trade and economic policies have also put a damper on the dollar rally as the President-elect’s Inauguration Day approaches. The dollar stood at 117.30 yen in late Asian session, having briefly dipped below the 117 level yesterday.

The yen was slightly weaker against most major currencies on Tuesday after inflation, consumer spending and unemployment data all missed expectations. Core CPI in Japan was unchanged at -0.4% year-on-year in November, making it the ninth consecutive month that inflation has been in negative territory and against forecasts that it would rise to -0.3%. Household spending also disappointed as it fell by 0.6% month-on-month in November, versus estimates of a 0.4% rise, while Japan’s unemployment rate unexpectedly ticked higher to 3.1% instead of holding steady at 3.0% as forecast.

The Australian dollar was stuck near 7-month lows, weighed by declines in certain commodity prices such as iron ore. The aussie was last trading around 0.7190 versus the US dollar, while the New Zealand dollar also struggled to recover much from last Friday’s multi-month lows and was up slightly at 0.6898.

Gold prices headed higher in Asian trading on Tuesday, mainly on the back of higher demand from China. The precious metal rose to a two-week high of $1150.53 an ounce before easing to around $1144. Rising US treasury yields following Trump’s election win have sent gold prices plummeting since November, reversing over half of its gains since the start of the year.

Oil prices also firmed as investors looked to the upcoming cuts in production that will take effect in the New Year. WTI oil futures climbed to $53.31 a barrel in late session.

In European currencies, the euro and the pound were both steady at 1.0448 and 1.2275 dollars respectively. Fears of a fresh Eurozone banking crisis subsided last week after Italy’s government approved a bailout for the country’s third largest bank, while a settlement between the US Justice Department and Deutsche Bank (DE:DBKGn) also helped improve sentiment for the euro. The pound on the other hand has declined towards two-month lows on heightened fears of a ‘hard’ Brexit.

The rest of the day is looking extremely quiet in terms of data with only the Conference Board Consumer Confidence index in the US likely to attract some attention.