Yesterday’s uncertainty gave way to optimism this morning causing the USD to give back gains
The November sell-off in the dollar paused yesterday afternoon as investors took profits on equities and short dollar positions. December begins with more dollar weakness as vaccine developers officially file for approval to begin distributing Covid therapies boosting risk sentiment. Canada announced yesterday afternoon additional stimulus spending helping to offset weaker oil prices resulting in a stronger CAD.
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December 1, 2020
EUR/USD 1.1984 GBP/USD 1.3349 USD/CAD 1.2963 AUD/USD 0.7352 USD/JPY 104.41 USD/CNH 6.5705 USD/ILS 3.3013 USD/MXN 20.0811 USD/CHF 0.9046 USD/INR 73.6675
A late day rally in the dollar closed out November which saw the dollar lose about 3% versus a basket of currencies over the month. The brief dollar strength was attributed to month-end closing and short covering. This morning the dollar seems to be resuming its fall and many FX market watchers see continued dollar weakness well into 2021. ISM data for November is due later this morning.GBP
The pound is stronger as markets await news of a UK/European Union trade agreement. Politicians on both sides of the English Channel made positive comments around talks helping to lift sentiment and embolden FX traders who are long the pound. News of a trade agreement could be announced this week after which governments will have to ratify before the December 31 deadline.EUR
The euro pushed over the 1.20 level again as optimism on vaccines and a UK/EU trade agreement lifted sentiment. Comments by the European Central Bank were consistent with market expectations of continued ultra-loose monetary policy for the foreseeable future.CAD
The Canadian dollar is flat after yesterday’s announcement of additional stimulus by the Canadian government. Canada plans spending programs to combat the economic effects of Covid that could go on for several years. The price of oil is steady after OPEC+ nations decided to continue discussing a possible extension of existing production cuts in efforts to support the price of oil.ASIA/PACIFIC
The Australian dollar is steady after the central bank held the benchmark rate at 0.10% and essentially promised to hold rates at current levels for 3 years.
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