Dollar Slips To Weakest Level Since 2018
DECEMBER 30, 2020
The U.S. dollar continues to weaken ahead of the end of the year.
The Bloomberg Dollar Index dropped almost half a percent and now stands at the weakest point since April 2018.
Risk sentiment is slightly positive today with equities around the globe in the green. There is not much in the way of news to spark a major rally, but the modest uptick is enough to put downward pressure on the greenback. Liquidity is already thin, and we expect that trend to continue until tomorrow afternoon. Sharp, knee-jerk type moves can be expected but overall we think the greenback will remain in ranges.
Today’s economic data includes November trade balance, Chicago PMI, and November home sales.
What to Watch Today…
- No major events scheduled for today
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The Euro advanced again against the U.S. dollar and broke fresh highs. The common currency is now at its strongest level since April of 2018. The pop-in risk sentiment comes as European Union and Chinese leaders are set to announce a hard-fought agreement to expand opportunities in China for foreign investors. On most weeks, this might not be enough to substantially move the currency but with thin market conditions, any positive news can move the needle.
The British pound climbed against the greenback and is right at a 2.5 year high. The recent move higher comes on news that Prime Minister Boris Johnson is set to win parliamentary approval of the post-Brexit trade deal. It appears that hardliners within the Conservative party will support the deal. The opposition Labour party has criticized the bill but has also indicated they will also support the agreement. The deal is expected to sail through the House of Commons this afternoon and the House of Lords this evening to make the end of year deadline.