The ICE Dollar Index

The ICE Dollar Index, which tracks the dollar against a trade-weighted basket of currencies, was at 77.908 from 77.898.
As a result, Deutsche Bank's Power Shares US Dollar Index Bearish (UDN) exchange-traded fund was trading up 0.18% from late Tuesday, while it's Power Shares US Dollar Index Bullish (UUP) was 0.1% lower.
The two exchange-traded funds are based on Deutsche Bank currency futures indexes, whose composition mirrors that of Ice's Dollar Index.

See the euro's moves against the dollar

To see the euro's moves against the dollar, please read :

"The dollar rally which has taken place in December is significant in that it has brought an end to the powerful downtrend which had been in place since March following the Fed's decision to begin quantitative easing," Lee Hardman, a currency economist at Bank of Tokyo-Mitsubishi UFJ in London, wrote in a note to clients Thursday.

The number of people filing new claims for unemployment benefits in the U.S. unexpectedly fell in the latest week to its lowest level in 18 months, a sign the labor market may have turned a corner.

Dow Jones & the U.S. economy

Initial claims for unemployment benefits fell by 22,000 to a seasonally adjusted 432,000 in the week ended Dec. 26, the lowest level since July 19, 2008. Economists surveyed by Dow Jones Newswires had forecast claims would rise by 3,000.
For the most part of 2009, ultra-low interest rates in the U.S. prompted investors to snap up the euro and other growth-sensitive assets every time there were signs that the global economy was emerging from the worst recession in decades.
They would borrow cheap dollars, thus using the greenback to fund the purchase of other riskier assets.

But recently this trading pattern seems to have changed: Stronger U.S. economic data support the dollar as investors become more confident the Fed will begin removing monetary stimulus, and eventually lifting interest rates, sooner rather than later.

As many investors were on the sidelines Thursday due to the holiday break, extreme light trading exaggerated price moves, traders said.
Japanese markets were closed and financial markets in many countries shut down early for New Year's Eve. Virtually all markets in the world will be closed Jan. 1.

Market players in the dollar's direction

The main focus for market players is the direction of the dollar now that year-end buying is no longer around to give the greenback support," said Minoru Shioiri, chief manager of FX trading at Mitsubishi UFJ Securities.
"And the reaction of U.S. yields to the upcoming data will be key for dollar/yen," he said.

Dollar's trading system

Higher longer-dated U.S. Treasury yields underpinned the dollar's recent gains against the yen, traders said, with benchmark Treasury yields rising above 3.9 percent on Thursday, in sight of last year's high around 4 percent.
The dollar was trading around 92.90 yen JPY=, having risen as high as 93.15 yen on trading platform EBS last Thursday, its highest since early September 2009.

Private-sector jobs

Before the key jobs report on Friday, investors will also scrutinize the Institute for Supply Management December manufacturing index later on Monday, which is expected to show a reading of 54.0 versus 53.6 in November. Also a private-sector jobs report and weekly jobless claims are slated for this week.
The minutes from the Federal Reserve's December monetary policy meeting are also scheduled to be released on Wednesday.

Market players

The dollar edged down from a four-month high against the yen but held firm against other majors on Monday, the first trading day of 2010, as investors focus on U.S. data this week that could add to optimism about the economy.
Investors are set to take cues from the U.S. December employment report on Friday as well as figures from the manufacturing and service sectors. ECONUS

The main focus for market players is the direction of the dollar now that year-end buying is no longer around to give the greenback support," said Minoru Shioiri, chief manager of FX trading at Mitsubishi UFJ Securities.
"And the reaction of U.S. yields to the upcoming data will be key for dollar/yen,"

Japanese exporters' selling

Although the U.S. currency maintained its firm tone, its upside against the yen was capped by Japanese exporters' selling, traders said.
The dollar index, a gauge of the greenback's performance against six other major currencies, inched up 0.3 percent to 78.060.
The euro was trading around $1.4285 EUR=, down 0.3 percent from U.S. trading on Dec. 31.

Higher longer-dated U.S. Treasury yields underpinned the dollar's recent gains against the yen, traders said, with benchmark Treasury yields rising above 3.9 percent on Thursday, in sight of last year's high around 4 percent. [US/] US10YT=RR
The dollar was trading around 92.90 yen JPY=, having risen as high as 93.15 yen on trading platform EBS last Thursday, its highest since early September 2009.

Yen crosses & Euro

Yen crosses were lower with the euro slipping 0.5 percent to 132.53 yen EURJPY=R and the Australian dollar falling 0.5 percent to 83.10 yen. AUDJPY=R
The U.S. non-farm payrolls report is expected to show U.S. employers cut 20,000 jobs in December, according to economists polled by Reuters, after the economy shed a much lower-than-expected 11,000 jobs in November.

Data released last week showed the number of U.S. workers filing new applications for jobless benefits unexpectedly fell in the week ending Dec. 26 to the lowest level in about 17 months.

The data helped the dollar to rise against the yen to its highest since early September as it affirmed optimism about the U.S. economy.
An improvement in Friday's jobs data could lift the greenback in the short-term, but it is still open to question whether the dollar will keep its upward momentum, traders said.

The dollar

"The dollar seems to have a little more room to rise as an initial reaction to positive economic figures," said a trader at a Japanese bank.
"But we probably need to wait before making conclusions on the dollar's direction, we should not decide after a single set of monthly jobs data," he said.

FOREX-Dollar below 4-month high vs. yen

The dollar edged down from a four-month high against the yen but held firm against other majors on Monday, the first trading day of 2010, as investors focus on U.S. data this week that could add to optimism about the economy.

Investors are set to take cues from the U.S. December employment report on Friday as well as figures from the manufacturing and service sectors.

"The main focus for market players is the direction of the dollar now that year-end buying is no longer around to give the greenback support," said Minoru Shioiri, chief manager of FX trading at Mitsubishi UFJ Securities.
"And the reaction of U.S. yields to the upcoming data will be key for dollar/yen," he said.

The dollar's recent gains against the yen

Higher longer-dated U.S. Treasury yields underpinned the dollar's recent gains against the yen, traders said, with benchmark Treasury yields rising above 3.9 percent on Thursday, in sight of last year's high around 4 percent. [US/] US10YT=RR
The dollar was trading around 92.90 yen JPY=, having risen as high as 93.15 yen on trading platform EBS last Thursday, its highest since early September 2009.

The U.S. currency against the yen

Although the U.S. currency maintained its firm tone, its upside against the yen was capped by Japanese exporters' selling, traders said.
The dollar index, a gauge of the greenback's performance against six other major currencies, inched up 0.3 percent to 78.060. .DXY
The euro was trading around $1.4285 EUR=, down 0.3 percent from U.S. trading on Dec. 31.

The dollar to rise against the yen

Yen crosses were lower with the euro slipping 0.5 percent to 132.53 yen EUR/JPY=R and the Australian dollar falling 0.5 percent to 83.10 yen. AUD/JPY=R
The U.S. non-farm payrolls report is expected to show U.S. employers cut 20,000 jobs in December, according to economists polled by Reuters, after the economy shed a much lower-than-expected 11,000 jobs in November. [ECI/US]
Data released last week showed the number of U.S. workers filing new applications for jobless benefits unexpectedly fell in the week ending Dec. 26 to the lowest level in about 17 months. [ID:nN31170026]
The data helped the dollar to rise against the yen to its highest since early September as it affirmed optimism about the U.S. economy.
An improvement in Friday's jobs data could lift the greenback in the short-term, but it is still open to question whether the dollar will keep its upward momentum, traders said.

The dollar's direction

"The dollar seems to have a little more room to rise as an initial reaction to positive economic figures," said a trader at a Japanese bank.
"But we probably need to wait before making conclusions on the dollar's direction, we should not decide after a single set of monthly jobs data," he said.