Dollar Index Down Today, But Expected to Gain on the Year

Greenback is heading lower today against most of its major counterparts. The dollar index might be up on the year, but today it’s pulling back on disappointing data and better news in other regions.

US dollar is struggling today, heading mostly lower as Forex traders assess their positions at the end of the year. The dollar index is a bit lower, following recent economic data. The Institute for Supply Management released its December manufacturing index, showing that it fell to 56.9. This was a bit unexpected, especially following a surprising advance in November.

Also helping other currencies, particularly the euro, is the fact that demand for bonds is rising in the euro zone. Italy recently saw a decent bond sale, with yields dropping.

Even though the dollar index is lower today, though, it is expected to end higher on the year. Overall, the dollar has had a fairly strong year, with the United States economic recovery progressing. Additionally, expectations of a taper of the Federal Reserve asset purchase program are being realized.

At 15:32 GMT the dollar index is down to 80.0530 from the open at 80.2320. EUR/USD is up to 1.3801 from the open at 1.3753. GBP/USD is also higher, gaining to 1.6507 from the open at 1.6474. USD/JPY is down to 105.0845 from the open at 105.1800.

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