Dollar shows mixed moves in subdued holiday trading

The dollar rose against the yen, but declined against most other major currencies on Monday amid subdued, holiday-thin trading and a lack of cues.

As of last check, the greenback USDJPY, +0.26% traded at ¥119.79, from ¥119.52 in late New York trading Friday. However, the dollar slipped against the euro EURUSD, +0.25% with the shared currency buying $1.2266, up from $1.2229 late Friday. The WSJ Dollar Index BUXX, -0.19% a measure of the dollar against a basket of currencies, was down 0.18% at 82.45.

“There aren’t many market participants this week with many overseas investors beginning to take their Christmas vacations,” said Junichi Ishikawa, market analyst at IG Securities in Tokyo.

“In a situation like this, the focus will be on whether the recent improvement in risk appetite will continue,” he said.

The dollar has strengthened against rival currencies in recent days, benefiting from signals from the Federal Reserve over the raising of interest rates next year.

On Wednesday, Fed Chairwoman Janet Yellen said the central bank could raise U.S. interest rates for the first time since the financial crisis as early as its April policy-setting meeting. Meanwhile, the Bank of Japan and the European Central Bank have been taking measures to ease policy in their battle to stimulate growth and ward off deflation, moves that have weakened their respective currencies.

The Fed chief’s comments served to restore some calm in markets riled by the fall in oil prices CLG5, +0.72% and the meltdown in the Russian ruble USDRUB, -4.86% Ishikawa said.

But Daisuke Karakama, chief market economist at Mizuho Bank, said the pair could fall again if risk-aversion sets in, rekindled by Russia crisis fears and other geopolitical risks.

“That could see yen-short positions unwind, triggering a large fall in the dollar/yen,” he said.

The ruble USDRUB, -4.86% recovered some ground to 56.70 per dollar, compared with 59.46 late on Friday, although it is still down more than 40% against the dollar this year. The rebound on Monday came as oil prices CLG5, +0.72% rose to the highest level in more than a week, which is good news for the oil-dependent Russian economy.

The ruble dived to an all-time low last week amid concerns that Western-imposed sanctions on Moscow, coupled with the recent slump in oil prices, would pull Russia into a prolonged recession. Russia’s central bank hiked the key interest rate to 17% on Tuesday, but the move did little to immediately stem the ruble slide as investors worried it had acted too late.