Dollar rises after Fed minutes reveal rate debate

NEW YORK: The dollar rose against the euro on Wednesday (Apr 8) after the minutes of the Federal Reserve’s last policy meeting showed a split over the timing of an interest rate increase.

According to the minutes of the Mar 17-18 meeting of the Federal Open Market Committee, “several participants” thought conditions were right for a June hike in the federal funds rate, stuck near zero since late 2008.

Others deemed the economy would not be able to weather a hike until later in the year, while “a couple” said liftoff would remain unlikely until 2016.

“After the FOMC meeting, people were convinced that the June rate hike was off the table, and the bottom line is between now and then,” said David Solin of Foreign Exchange Analytics. But the foreign exchange market “had jumped the gun by thinking that a June hike was off the table,” he said.

The dollar strengthened against the euro, pushing it down to US$ 1.0780 from US$ 1.0811 late Tuesday.

Omer Esiner, chief market analyst at Commonwealth Foreign Exchange, said that the minutes had “a somewhat more hawkish tone than many were expecting, especially given the extent to which the Fed cut its forward guidance on growth and inflation at its March meeting.”

Weakening Against U.S. Dollar, Renminbi Lead Euro’s Decline

  • By
  • Brian Blackstone

Roughly half of the euro’s decline between May 2014 and February were driven by the weakening of its exchange rate against the U.S. dollar and Chinese renminbi, the European Central Bank said in its economic bulletin Thursday.

In a study included in the bank’s economic bulletin (pages 42-44) the ECB notes that, between the euro’s May 2014 peak and Jan. 23 of this year, the euro weakened about 10% against a broad basket of currencies. The euro, it said, “has stabilized in recent weeks with the return of capital inflows following the ECB’s announcement of its expanded asset purchase program after the 22 January 2015 Governing Council meeting.”

Of that drop, “half the fall in the (nominal effective exchange rate) was accounted for jointly by the US dollar and the Chinese renminbi,” the ECB said. Each rose about 20% versus the euro during that time frame, with the dollar “supported by expectations of further diverging monetary policies in the euro area and the United States, market uncertainty in an environment of declining commodity prices and heightened geopolitical tensions,” the ECB said.

The Swiss franc’s sharp rise against the euro, after the Swiss central bank abandoned its currency ceiling for the franc’s value against the euro in January, accounted for about 10% of the broad decline in the euro, according to the ECB’s estimates. The euro also weakened against the yen, sterling and many emerging market currencies.

These declines were offset somewhat by the sharp rise in the euro against the Russian ruble, and the eurozone currency also strengthened against the Swedish krona. “The euro also remained relatively stable against the currencies of commodity exporting countries, which came under downward pressure as a result of declining oil prices, as well as against currencies of central and eastern European EU countries,” the ECB said.

The report doesn’t project where things will go from here, which is, of course, the central question for financial markets. Nevertheless, the ECB suggested recent movements weren’t unusual.

The euro’s effective exchange rate “has experienced large swings since the outbreak of the global financial crisis. From a longer-term perspective, such large movements are not unusual and had also been observed before the crisis,” the ECB said.

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Dollar revs up for jobs data, euro bonds rally on ECB

By Marc Jones

LONDON (Reuters) – The dollar hit a new 11-year high against major currencies on Friday as investors bet the monthly U.S. jobs report would add to the chance of rate hikes, even as the European Central Bank embarks on a 1 trillion euro campaign of bond-buying.

The euro broke below $ 1.0980 for the first time since September 2003 as it continued its steady march lower. [FRX/]

The same balance of risks saw the gap between German and U.S. bond yields stretched to its widest in more than a quarter of a century as government bond yields across the 19-country euro zone took another step lower. [GVD/EUR]

Equity investors were playing it safe, however, ahead of the U.S. jobs data.

Europe’s benchmark FTSEurofirst 300 <.FTEU3> was barely changed in early trading after Thursday’s news that the ECB will start its long-awaited QE program on Monday had seen it hit a seven-year high.[.EU]

Analysts polled by Reuters expect U.S. payrolls due later to have increased 240,000 last month and the jobless rate to have ticked down to 5.6 percent from 5.7 percent.

Although that would be a slight slowdown in the headline trend it would mark the 12th straight month of job increases above 200,000, the longest such run since 1994.

Philip Marey, a U.S.-focused strategist at Rabobank, said the Fed is happy with the labor market in terms of interest rate hikes, but slack prices were a concern.

“It is the (low) inflation picture that will deter them from pulling the trigger on interest rates early,” he said.

Against a basket of major currencies the dollar <.DXY> was at the new 11-year year highs, but dealers saw little prospect of significant further moves before the payroll numbers at 0730 ET.

The recent run of U.S. economic news has been mixed at best, leading analysts to steadily downgrade forecasts for growth this quarter. A strong jobs report could offset that and give the Fed reason to stick to its tightening timetable at the next policy meeting on March 17-18.

In contrast, the picture in Europe has been steadily improving.

Data on Friday showed German industrial output rose more than expected in January, notching up its fifth straight monthly increase, while it also climbed 0.4 percent year-on-year in Spain.

“The positive result in January and the upward revision of the data from the previous months underline that the recovery of the German economy is continuing,” its economy ministry said.

(Additional reporting by Wayne Cole in Sydney Editing by Jeremy Gaunt)

Dollar slips on Fed chief’s rate hike comments

Fifty hurt when Southern California train slams into truck

By Michael Fleeman OXNARD, Calif. (Reuters) – A Los Angeles-bound commuter train slammed into a tractor-trailer apparently stuck on the tracks in a Southern California city before dawn on Tuesday, injuring 50 people in a fiery crash, four of them critically. The truck driver, who was not hurt, left the scene of the destruction in Oxnard on foot and was found walking and talking on a cell phone in “some sort of distress” more than 1.6 miles (2.6 km) away, Assistant Police Chief Jason Benites said. Jose Alejandro Sanchez-Ramirez, 54, was taken into custody on felony hit-and-run charges for leaving the scene of the accident, Benites said. While no one was killed, the force of the impact overturned three double-decker Metrolink rail cars and derailed two others, ripped the truck apart and left burned chunks and twisted wreckage still smoldering hours later.

Euro Pressure Builds as Another Greek Deadline Comes Into View –

Talking Points:

  • Dollar Consolidation Mirrors Yield Forecast
  • Euro Pressure Builds as Another Greek Deadline Comes Into View
  • British Pound Steady Despite Record Low Inflation Reading

Dollar Consolidation Mirrors Yield Forecast

Though the Dollar’s larger trend is still bullish – both fundamentally and technically – the speculative ranks have clearly paused in driving the currency higher. The Dow Jones FXCM Dollar Index (ticker = USDollar) has consolidated for the past three weeks marking the longest break from the record, seven-month climb since the October slump. From a fundamental perspective, the equilibrium looks very much like the leveled out interest rate expectations. After retreating in January, we have seen Fed Fund and Eurodollar futures rebound following the strong wage and labor figures nearly two weeks ago. Though the products still show the market is not fully pricing in the first hike until September or October (whereas economists and Primary Dealer consensus hold to the June or July time frame), an additional 50-55 basis points worth of hikes is priced through the end of the year. Reinforcing the front end time frame or leveraging the expected pace of hikes after the first move requires more tangible evidence – either through economic data or an increasingly unified FOMC view.

Yet, as encouraging as the US data flow has been (even after the recent tempering) and as relentless as the hawkish tone from the Fed majority remains, there isn’t enough to drive sentiment to the next plateau. In the meantime, the upcoming docket offers a range of event risk that can generate moderate friction in rate speculation with an off-chance of truly redefining the outlook. The Fed minutes from the January 28 meeting will be combed for meaningful changes to the views and voting habits of the central banks’ members. This is our best hold over until the March 18 FOMC meeting which will come equipped with updated forecasts and Chairwoman Yellen’s press conference. For data, housing starts, industrial production and capital flows (so called ‘TIC’ numbers) are important but won’t tap major fundamental veins. The factory inflation data (PPI) will carry a little more sway. A surprise to the upside will likely carry more market impact than a shortfall.

Euro Pressure Builds as Another Greek Deadline Comes Into View

Whether we look at the chart of EURUSD, EURGBP or EURJPY; we see the same thing: building pressure behind consolidating ranges. As with the Dollar, the Euro’s price fits its fundamental lines well. We are heading into yet another deadline for Greece and its creditors to make meaningful progress on their negotiations or face further fanning fear of instability. Wednesday, the ECB will discuss what to do about Greek financial institutions’ access to the ELA liquidity program. After waiving exceptional policy that allowed the country’s lenders to use substandard collateral (Greek sovereign bonds that technically have a ‘Junk’ rating), the last source of funding was the ELA. This is only meant to be a temporary facility and there is a cap of €65 billion which may be quickly be swamped by deposit flight. Notably, back in 2013, the ECB cut Cyprus off from similar credit lines which in turn forced a deal between the government and Euro-area leaders. A similar maneuver is unlikely to yield such straightforward results here and would be highly unlikely as it carries a very palpable risk of triggering systemic Eurozone financial concerns. According to news reports claiming unconfirmed sources, Greece may request an extension to the country’s ‘loan agreement’ with stipulations. That would contradict what PM Tsipras has advocated to this point. Better to be less hopeful and more cautious.

British Pound Steady Despite Record Low Inflation Reading

That was not the reaction many were expecting. The UK’s headline consumer inflation (CPI) figure posted its slowest pace of growth in the modern measure’s 26-year history. At 0.3 percent year-over-year growth, it seems there’s plenty of reason to expect a permanent hold on hikes if not reason for future cuts. And yet, the Pound was mixed on the day. Recalling BoE Governor Carney’s remarks last week, prices for fuel and food are dropping while core figures are stabilizing. Ahead, we have January jobs figures and the BoE minutes for more policy color.

Japanese Yen: BoJ Keeps to the QE Script but Problems Arising

As expected, the Bank of Japan (BoJ) announced no changes to its open-ended QQE program. Further, their comments suggested they would continue with the policy effort until their inflation goals are met. Yet, cracks are forming in the stimulus façade. Last week, it was reported some BoJ members are voicing concern of the detriments of an excessively low Yen.And, as CPI rises, real wage growth is collapsing

US Oil Closes in on Meaningful Reversal, But Supplies Not Aiding Ascent

The benchmark US WTI oil futures contract tempted another move on $ 55 this past session though it ultimately held near the top of the range from the past two weeks. A reversal can happen on a supply-demand adjustment, but no major output changes are expected, so that spark may await Thursday’s DoE numbers. We should also watch a speculative spark. Volume and open interest are rising in futures. Is it trend-worthy?

Emerging Market Currencies Mixed, Capital Markets Slow to Follow US Equities

It was a meaningful disparity in performance. On the one hand, we had US equity indexes setting record highs while the MSCI Emerging Market ETF floundered with a 0.2 percent drop on the day. The implications of monetary policy changes and capital flight on developed world issues is too prevalent. For big FX moves, the Russian Ruble is already up 1.5 percent this morning as Ukraine tensions refuse to temper.

Gold Drops Alongside Dollar

Historically, gold and the Dollar maintain a strong negative correlation. Over the past five trading days (one week), that relationship has flipped positive (0.50). That is remarkable given that the Dollar slipped on the day while the precious metal dropped 1.8 percent. With another financial spark ahead between Greece and the ECB and lingering Dollar, we will see if the metal can fall back on its bygone drivers.

**Bring the economic calendar to your charts with the DailyFX News App.










Conference Board Leading Index (MoM) (DEC)




Westpac Leading Index (MoM) (JAN)




Jobless Claims Change (JAN)



The labor market has improved in the UK as the unemployment rate and the jobless claims are decreasing. Watch the Live Webinar at 9:15 GMT



ILO Unemployment Rate (3M) (DEC)





Average Weekly Earnings (3M/YoY) (DEC)



Real wage growth will likely come into factor when the BOE decides on policy.



ZEW Expectations (FEB)


It has been contracting in 2014. An anemic growth in the Eurozone, Switzerland’s largest trading partner, might be causing expectations for growth to be lowered.



Eurozone Construction Output (YoY) (DEC)


A volatile measure that isn’t likely going to impact the market’s expectation of future ECB policy.



Eurozone Construction Output (MoM) (DEC)




MBA Mortgage Applications (FEB 13)


A volatile measure that would measure future housing demand



Building Permits (MoM) (JAN)



Many of the housing indicators have been underperforming the market’s expectations lately.



PPI Final Demand (YoY) (JAN)



Has been declining since June 2014 as oil prices fell. The slide in the growth rate of the measure might be one of the causes of why the US CPI core rate is below the Fed’s 2% target.



Manufacturing Production (JAN)



A volatile measure. US Data has been underperforming economists’ expectations as indicated by the Citi US Economic Surprise Index



Total Net Long term TIC Flows (DEC)

$ 33.5B

US total net long term flows have been strong in 2014. The reason might be due to a stronger US economy leading to more foreign capital to come in as the rest of the world is slowing down.



ANZ Job Advertisements (MoM) (JAN)


A volatile measure that isn’t likely to be market moving.


To see updated SUPPORT AND RESISTANCE LEVELS for the Majors, visit Technical Analysis Portal

To see updated PIVOT POINT LEVELS for the Majors and Crosses, visit our Pivot Point Table



— Written by: John Kicklighter, Chief Strategist for

To contact John, email [email protected] Follow me on twitter at

Sign up for John’s email distribution list, here.

original source

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Euro Heading into the Lion’s Den as Eurozone-Greece Talks Scheduled –

Talking Points:

  • Dollar Holds Fast as Fed Officials Feed Rate Hike Speculation
  • Euro Heading into the Lion’s Den as Eurozone-Greece Talks Scheduled
  • British Pound Feels EU Connections, Awaits BoE Quarterly Report

Dollar Holds Fast as Fed Officials Feed Rate Hike Speculation

The Dollar is holding its ground rather than progressing. While Fed rhetoric continues to actively build interest in rate speculation, the forecast for a ‘mid-2015’ hike may be a saturated theme. In the meantime, there is untapped potential in the troubled situations for the Greenback’s major counterparts. As the Forex market’s primary ‘alternative’ (reserve) currency, downgraded yield forecasts for one region or financial trouble for another will find a majority of capital flowing to the US financial system. At the top of the Dollar trader’s list of fundamental cues to watch moving forward is the situation in the Eurozone (more on this below). While the region’s leaders and central bank may have better prepared it against contagion risk from flare ups like a Greece standoff, it is unlikely that they can avoid capital flight.

Adding to the Dollar’s counterparty strength; the BoJ is maintaining its easing path, swaps are pricing in an RBA and RBNZ rate cuts (37 and 13 bps over 12 months, and the BoE – the Fed’s closest peer – is on pause ahead of its quarterly report due Thursday. For the Fed’s own bearing, the 44 bps worth of hikes being priced in through next February offers leverage in its contrast. This past session, Richmond Fed President Lacker (a voter) repeated a June time frame for the first rate hike was an “attractive option”. Meanwhile, Kansas City Fed President George took a different tack when she remarked that hiking rates earlier rather than later can help head off an asset bubble. From the market’s perspective, Fed Funds futures are not pricing in the first full hike until the October meeting while a recent Reuters poll of Primary Dealer found 10 of 19 believed the first hike would come in June (previously it was 13) and the median expected a 0.75 percent rate at the end of the year. There is room to build or collapse the rate view, but a meaningful shift in ‘risk’ trends remains top potential.

Euro Heading into the Lion’s Den as Eurozone-Greece Talks Scheduled

The sound bites about the Eurozone-Greece debt standoff crossed the wires at lightning speed this past session. And little of it sounded encouraging. Some media reports quoting ‘insiders’ in the two camps suggest both sides are more open to compromise than the leaders’ commentary lets on. However, if it is between Prime Minister Tsipras’ own public statements and an unnamed source’s reassurances, it is more prudent to take the policymaker’s threats and beliefs at face value. This past session, Tsipras put his hardline negotiation terms up to a confidence vote and won strong support. Among the terms, he said he would not ask for a bailout extension, will seek a bridge loan (with no new austerity measures attached) to negotiate through June, and they would not accept Troika auditing. Those would be difficult terms for Eurozone officials to swallow. For the more conservative, they are likely fully unacceptable. German Finance Minister Schaeuble for example said there would be no more time (refuting speculation of the six-month extension), that Greece can’t “negotiate something new” and that it would be “over” if the country doesn’t ask for an extension. Those are diametrically opposing stances. While there is always room for compromise and for yielding concessions, it is worth considering what happens if Greece eventually leaves the Eurozone.

British Pound Feels EU Connections, Awaits BoE Quarterly Report

High profile event risk can prove exceptionally market moving or lack impetus altogether depending on the outcome and the market’s expectations. However, there is a far more consistent market influence when it comes to a fundamental storm: a drop in activity and withdrawal of exposure in the lead up to the event’s dawning. That is what we should consider for Pound pairs in the lead up to Thursday’s Bank of England Quarterly Inflation report – a key insight into speculation surrounding the central bank’s plans for that deferred rate hike. In the meantime, watch for spillover effects from the Eurozone’s more active issues as the EU connection can make for easier transmission.

Canadian Dollar Worst Performer as BoC Feeds Speculation of Further Cuts

While the Fed decision will stand as top event risk for the broader FX market given its outlier status, the greatest market-movement potential for a specific currency likely rests with the RBNZ decision. Not only is the bank’s head Graeme Wheeler prone to blunt statements, but the market has deviated aggressively from his most recent lean (modestly hawkish) due this week’s CPI. If he maintains course, Kiwi could snap back.

Australian Dollar: A 41% Probability of an April Hike Heading into Jobs Data

The RBA cut interest rates at its last meeting, and concerns about the economy as well as the ‘fundamentally expensive’ currency seems to have the market believing there is a good probability of a back-to-back easing at the next meeting on March 3. Swaps arepricing in a 41 percent probability of another 25 bp cut. Given the sensitivity of the market to rates, Thursday’s jobs data can leverage a big shift here.

Emerging Market Currencies Drop Lead by Brazil Real’s Tumble to Decade Low

Both Emerging Market equity and sovereign bond benchmarks have eased the past week, but they are far from freefall. In a risk-adverse world, the higher risk assets in these regions should theoretically be leaders in deleveraging. So is this effective policy, complacency or hope? From the FX ranks, the Ruble is still meandering near record lows, while the Brazilian Real tumbled 2.2 percent to a 10-year low.

Gold Still Drawing Speculative Appetite, Struggling for Systemic Demand

Looking to ETF holdings and the CFTC’s Commitment of Traders report, we find there significant demand building in certain areas for gold. However these are avenues that could reasonably labeled ‘speculative’. Where is the systemic demand for inflation and ‘deteriorating fiat’ hedges? It is still not showing in the face of Greece and new stimulus programs. If complacency is broken, will this change?

**Bring the economic calendar to your charts with the DailyFX News App.



To see updated SUPPORT AND RESISTANCE LEVELS for the Majors, visit Technical Analysis Portal

To see updated PIVOT POINT LEVELS for the Majors and Crosses, visit our Pivot Point Table



— Written by: John Kicklighter, Chief Strategist for

To contact John, email [email protected] Follow me on twitter at

Sign up for John’s email distribution list, here.

The information contained herein is derived from sources we believe to be reliable, but of which we have not independently verified. Forex Capital Markets, L.L.C.® assumes no responsibility for errors, inaccuracies or omissions in these materials, nor shall it be liable for damages arising out of any person’s reliance upon this information. Forex Capital Markets, L.L.C.® does not warrant the accuracy or completeness of the information, text, graphics, links or other items contained within these materials. Forex Capital Markets, L.L.C.® shall not be liable for any special, indirect, incidental, or consequential damages, including without limitation losses, lost revenues, or lost profits that may result from these materials. Opinions and estimates constitute our judgment and are subject to change without notice. Past performance is not indicative of future results.

original source

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Learn forex trading with a free practice account and trading charts from FXCM.

Dollar drifts up as Greek worries weigh on Europe

By Marc Jones

LONDON (Reuters) – Nerves over Greece’s future in the euro and the conflict in Ukraine dragged on European markets on Tuesday, while bets on the likelihood of a U.S. interest rate hike nudged the dollar higher and oil prices held steady after a rebound.

European stocks fell 0.3 percent and the euro slipped toward $ 1.13 ahead of what is set to be a tense, Greece-dominated meeting of euro zone finance ministers on Wednesday.

The global disinflation/deflation story was also back on investors’ radar as Chinese inflation fell below 1 percent to its lowest in five months, drawing talk of further easing from China’s central bank, the PBOC.

That had sent shares in Shanghai up more than 1 percent, though other Asian stocks eased on more generalized risk aversion.

Commodity price-dependent currencies such as the Australian dollar and Norwegian crown < EURNOK=> got a lift from the talk of China stimulus, but for many traders the main focus remained the dollar <.DXY> as it nudged up again.

“We are just wondering what the status is on this dollar move as U.S. rates (bond yields) rise,” Saxo Bank’s head of FX strategy, John Hardy, said.

“We had the big move on Friday after the strong jobs numbers but then yesterday everything went quiet so hopefully it will rally today to show that there is something behind it.”

On the strains on the euro, Hardy pointed out that markets appear relatively pragmatic about a potential exit of Greece from the 19-member currency bloc.

Although Greek markets have been hit hard – benchmark Greek bond yields remain above 10.75 percent – the euro performed relatively well against currencies other than the dollar. There has been limited impact on Spanish and Italian bond markets.

Britain’s finance minister George Osborne, however, warned on Tuesday that the risk of a “very bad outcome” was growing between Greece and the euro area. Britain is not a member but trades heavily with Europe.


Asian share markets had ended mostly lower with Japan’s Nikkei <.N225> down 0.8 percent and shares in Australia and South Korea also off, leaving MSCI’s broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> down 0.25 percent.

Chinese inflation data had again shown signs of weakness in the world’s No. 2 economy as consumer price inflation hit a five-year low of 0.8 percent year-on-year in January.

It adds to a huge global trend which is pressing central banks in many parts of the world to lower interest rates or turn to unconventional policy stimulus again.

“This will likely be the low point for CPI inflation given that oil is rebounding. Still, the data will increase rate cut expectations and we see a cut in March,” Credit Agricole senior economist in Hong Kong, Dariusz Kowalczyk, said.

According to a draft communique from leaders of the Group of 20 (G20) countries meeting in Istanbul, they will pledge to act decisively on monetary and fiscal policy, if needed, to combat the risk of persistent stagnation.

The United States, however, strongly underlined at the meeting that countries should not to use their currencies to try to boost exports, one U.S. Treasury official said in a thinly veiled reference to what is fast becoming a global currency war.

The dollar rose 0.15 percent to 118.78 yen , having hit 119.23 on Friday in a rally triggered by robust U.S. non-farm payrolls. It was also up 0.3 percent against the top six world currencies. <.DXY>

Among commodities, safe-haven gold dipped and crude oil snapped three days of gains after a survey showed that U.S. commercial crude stockpiles hit a record high last week.

It jumped on Monday as OPEC forecast greater demand this year than previously thought and projected less supply from countries outside the producer group.

U.S. crude was down 1.3 percent at $ 52.45 a barrel after gaining 2.3 percent overnight. Brent was 0.6 percent lower at 57.97 percent.

(Editing by Louise Ireland)

Dollar firms vs euro, yen on outlook for Fed rate hike

Suspect in Boston hospital shooting dead of ‘self-inflicted’ wound

A man suspected of shooting a doctor at a major Boston hospital on Tuesday later died of a “self-inflicted” gunshot wound, the city’s Police Commissioner William Evans said, adding that the incident was over. The victim in the shooting at Brigham & Women’s hospital, a male doctor, sustained “life threatening” injuries, police said. Police have yet to identify the shooter or the victim, who Evans said is being treated in the emergency room at Brigham & Women’s. Brigham & Women’s, located in downtown Boston amid a cluster of major healthcare facilities, is a teaching hospital for Harvard Medical School.

Dollar strengthens against Euro on US jobs data

Following the U.S. jobs report on Friday, the dollar strengthened against the euro. It declined slightly against the yen.

The U.S. j ob picture held steady in December, with the U.S. economy creating 252,000 jobs for the end of the year, while the unemployment rate dropped to 5.6 percent. This extends the longest run of job creation on record. The U.S. was expected to create 240,000 jobs.

The dollar index (Exchange:.DXY), which tracks the greenback against a basket of major currencies, last stood unchanged. The index hit its highest in almost a decade on Thursday.

The euro stood at around $ 1.1806, near a nine-year low of $ 1.1754 reached on Thursday and close to $ 1.1747, the level at which it began trading in January 1999.

Numbers released on Friday by the euro zone’s two biggest economies, France and Germany , only darkened the outlook for the 18-nation currency bloc. Industrial output declined in both countries and German exports fell sharply.

Also weakening the euro was concern that a January 25 Greek general election will lead to a stand-off between Berlin and Athens over austerity policies imposed on Greece as a condition of its international bailout.

“Currently, market pricing is beyond that so there’s still a lot of scope for U.S. yields to rise and for that to continue to provide support for the U.S. dollar.”

“The dollar index is likely to rise beyond the 2005 peak. But to rise well beyond the peak, we will likely need to see further widening in yield gaps (between the dollar and other currencies),” said Minori Uchida, chief FX strategist at Bank of Tokyo-Mitsubishi UFJ in Tokyo.