The dollar, on Thursday, December 22, slumped for the second consecutive day as traders booked profits ahead of a batch of U.S. data later in the day.
Investors engaged in profit taking despite the fact that the greenback was still trading less than a percent away from a 14-year high touched earlier in the week.
The U.S. currency has surged since last week, when the U.S. Federal Reserve hinted that interest rates would be increased three times in 2017 after its first rate hike in a year, with the dollar index – which measures the greenback against six major peers – hitting its highest since December 2002 .DXY.
It had already been climbing in the wake of Donald Trump’s victory in the U.S. presidential elections six weeks ago, up 5 percent since then, with investors betting the president-elect’s planned tax cuts and increased spending in areas like infrastructure will boost growth and inflation, leading to higher interest rates.
The dollar dipped 0.1 percent on Thursday, having also fallen around a quarter of a percent on Wednesday.
However, analysts said this week’s moves must be viewed in the context of thin liquidity, and there was no clear evidence to suggest the dollar’s rally had run out of steam.
U.S. 10-year Treasury yields have climbed 70 basis points since Trump’s election to as high as 2.6 percent, driving the dollar higher.
While trade is expected to slow further ahead of Christmas on Sunday, the market’s near-term focus is on U.S. economic indicators due on Thursday, including revised GDP for July to September, durable goods orders for November, and weekly initial jobless claims.
