US Dollar continues the trend higher amid rising rate hike expectations

Daily Currency Update

With it being a public holiday in the U.S. on Monday, currency ranges were narrow.  But if there was one overriding theme, it was one of continued dollar strength.  The dollar has been bid higher over the last 12-24 hours as risk sentiment wanes and stock indices fall, more recently in Asia, prompted by the growing expectation that the Federal Reserve could hike interest rates by as much as 0.5% by March.  Whilst U.S. treasury yields continue to tick higher, so does oil, with Brent trading to its highest level since 2014 amid tight supply and Middle East tensions.

In other news, UK unemployment and average earnings data were released this morning, showing a continued improvement in the labour market.  Unemployment fell to 4.1% in November and average weekly earnings printed at +4.2%.  It’s helped the pound a little, with GBP/USD having recovered off its overnight low of 1.3625 to open the London session at 1.3645.