The dollar held its ground near 5 year highs against its peers today despite discouraging US housing figures as anticipation for an interest rate increase to take place next year further bolstered dollar demand. Volumes remained thin as the market enters holiday mode. The market overlooked US data revealing that existing home sales decreased by 6.1% from 5.25 million units in October to 4.93 million in November while experts had forecast only a 0.9% down tick. After the Fed noted a boost in the US labor market last week as its target for inflation and employment remain within sight the dollar maintained wide support.

The pound was virtually unchanged against the stronger dollar remaining near a 15 month low. The pound was not affected by the Confederation of British Industry’s report released Friday which revealed that its index of realized sales surged to its highest level in 26 years. The pound was weaker against the euro.

The euro strengthened against the dollar with the pair coming off its 2 year low following figures released by Eurostat which showed that its euro zone consumer confidence index advanced from -11.5 in November to -10.9 in December while experts had forecast a reading of -11.0. Other figures revealed that German import prices decreased 0.8% in November while a decline of 0.5% was forecast.

The yen weakened against the dollar with the pair breaking its 120 handle trading at 1 week highs as the dollar remained widely supported by talk of a rate increase by the Fed and while worry regarding the latest decline in oil prices subsided, lessening safe haven yen appeal. The Bank of Japan announced that its economy is steadily recovering and advances towards its target for inflation and employment have taken place. The yen was weaker against the euro.

The Australian dollar weakened to near 4.5 year lows while the New Zealand dollar was virtually unchanged and the Canadian dollar weakened against the dollar. The dollar gained to near 5 year highs against the loonie on dollar demand and as the loonie was still weighed down by data released on Friday which revealed that Canadian retail sales were unchanged in October following a rise of 0.8% in September.

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