Risk-on sentiment drives stocks higher, dollar lower

In light holiday trading, investor optimism regarding vaccine progress is feeding persistent risk-on sentiment in the marketplace. Stocks and foreign currencies are generally higher, and US Treasuries are steady. Emerging market stocks reached the highest level since 2007. Gold and oil edged higher, and the ultra-high-risk Bitcoin hit a fresh record high. Most major stock markets around the world will be closed on Friday for New Year’s Day.

“Hope smiles from the threshold of the year to come, whispering ‘it will be happier”.
Alfred Lord Tennyson
  • FX Rates
    December 30, 2020

    Rates are not real time. Rates are today's indicative mid-market rates as of time of publishing, which may vary. Please contact SVB for a current quote.


  • USD

    The dollar continues its long-term decline, the dollar index is lower by 0.3% overnight. The month of December has seen the dollar broadly lower –the Swedish krona was the best performing G-10 currency vs. the dollar, gaining 4.5%, and the worst performer was the Japanese yen gaining only 1.3%. Traders await a 10:00am release of US Pending Home Sales for November; expectations are for a big improvement over October.

    GBP

    The UK pound is higher by 0.8% overnight, currently trading just above $1.36. Today, the UK Parliament is set to approve the post-Brexit trade deal and earlier the European Union leaders signed the deal. On the coronavirus front, UK health regulators approved the Oxford/AstraZeneca vaccine, opening the ability for speedy vaccination.    

    EUR

    Germany reported 1,129 Covid-19-related deaths and 22,459 new infections over the past day, the highest-ever daily totals. Nevertheless, the euro is up by 0.5% vs. the dollar, in line with broad dollar weakness.

    CAD

    The Canadian dollar lagged all other G-10 currencies, gaining only 0.25% vs. the US dollar. The CAD is supported by firm oil and gold prices. There is no Canadian economic data today.

    ASIA/PACIFIC

    The Australian dollar soared to its highest level since June 2018 amid improving China manufacturing activity, higher commodity prices and broad dollar weakness.

    The Chinese yuan moved little, while the Japanese yen gained 0.5% overnight. The USDJPY currency pair has dropped back down to 103, and not too far from March’s panic low at 101.10.

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Scott Petruska, CFA
WRITTEN BY
Scott Petruska, CFA

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