Dollar Holds Steady - 3.1.2011

Currency trading was subdued in Asia Monday with Japan, Australia and New Zealand all on holiday. The dollar managed to claw back some of Friday's heavy losses in thin trade. EURUSD traded 1.3276-1.3363, and USDJPY 80.93-81.39. The Australian dollar retreated after setting new 28 year highs on Friday, when it rose to 1.0257 on fixing-related buying.

Today, the US manufacturing ISM for December is due and economists are expecting a modest increase to 57.0 from 56.6 previously. FOMC minutes and the payrolls report are scheduled to follow later in the week. IMM positioning data, which is normally released by the CFTC each Friday, will not be published until Monday evening due to the holiday season. The IMF's reserve manager survey for Q3 2010, shows that a record share of global FX reserves is now held in non-G5 currencies (i.e. in currencies other than the USD, EUR, JPY, GBP and CHF). These other currencies comprise 4.0% of reserve assets, which puts them (as a group) above the yen in terms of their reserve status, and on a par with sterling. The dollar's share of reserves fell to 61.3% (prev. 62.1%) in Q3 - it's lowest ever allocation. The euro's proportion increased slightly to 26.9% (prev. 26.5%).

EUR

Estonia became the 17th member of the Eurozone on New Year's Day. Germany's Chancellor Merkel and French President Sarkozy spoke in favour of maintaining the euro. Sarkozy said he will fight with all his strength to keep the euro as "the end of the euro would be the end of Europe". Merkel said "Germany needs Europe and our common currency", adding that the euro is "the foundation of our prosperity".