Dollar Steady; Sterling Falters on Lack of Brexit Progress
The U.S. dollar is mostly flat this morning, save a renewed rally against the British pound.
Global equities are lower for a second straight day, but the risk-off sentiment was not enough to boost the greenback.
U.S. futures also point to a lower open as hopes of a Covid stimulus deal before the end of the year dims. Hopes were high as of last week, but progress has ground to a halt. Senate Majority Leader Mitch McConnel has shown little signs that he will cave on his demand for federal limits on Covid- 19 related lawsuits against businesses.
The economic docket remains light today with only non-farm productivity data slated for release. There are also no Fed speakers on today’s docket so traders will continue to seek out progress in Washington and Brexit talks.
Today is also the deadline for states to certify their electors for the Electoral College, which may reduce lingering uncertainty and calm the markets a touch. But the event is mostly a formality.
What to Watch Today…
- No major events scheduled for today
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The Canadian dollar also experienced a rather quiet night, even as the price of oil sank slightly. USD/CAD will likely hold tight ranges ahead of tomorrow’s Bank of Canada interest rate meeting.
On the day that the U.K. starts to roll out their vaccination plans, it is worth noting that Canada has reserved more vaccine doses per capita than anywhere else. Perhaps this is just an interesting factoid, or it could ultimately play into markets if our northern neighbor can recover quicker as a result. The first Canadians are expected to get the vaccine as soon as next week.
After a wild session yesterday, the British pound is under heavy pressure again. The sterling traded in a wide, 150 basis point range yesterday, ahead of a meeting between Prime Minister Boris Johnson and European Commission President Ursula von der Leyen.
The conversation ended without a deal and has put bullish sterling traders in a bind. Johnson said that the situation is “very tricky” but that he was still working to secure a deal. Expectations of a deal had been on the rise for weeks, but the two sides still seem far apart, only weeks before the U.K. will crash out of the EU.
GBP/USD is down for a third straight day and has fallen nearly 2% from its Friday peak. On the bright side, vaccinations began to roll out today in the United Kingdom. Progress indeed!