Dollar little changed but its funding costs soar


TOKYO: The dollar was little changed against other major currencies on Monday in holiday-thinned trading while the cost of swapping the yen for the dollar jumped as banks scrambled to raise dollars for the year-end period. The dollar stood little changed at 113.30 yen in Asian trade on Monday, hardly gaining traction from upbeat US economic data published on Friday. US consumer spending accelerated in November and shipments of key capital goods orders increased for the 10th straight month.

The Federal Reserve’s preferred inflation measure, the personal consumption expenditures (PCE) price index excluding volatile food and energy prices, rose 0.1 per cent in November for an annual increase of 1.5 per cent, accelerating from 1.4 per cent in October.

The data helped to push the two-year US yield to a nine-year high of 1.899 per cent and dollar interest rate futures FFF9 to price in more than two rate hikes next year for the first time.

“2017 was the year when the dollar couldn’t rise even as the dollar short-term interest rates rose,” said Minori Uchida, chief currency analyst at the Bank of Tokyo-Mitsubishi UFJ.

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