The U.S. dollar reportedly declined on Wednesday morning in Asia. It seems that investors are taking some risks. For example, is the Brexit trade talk between the UK and the European Union (EU). Then, the Congress' debate on the latest COVID-19 stimulus measures also the reason.
It can be seen from the market data that the Dollar index fell slightly by 0.06% to 90.898. It means that the USD is half a percent above a two-and-a-half-year low. The data could be seen on Friday. Elsewhere, some currency pairs also showed movement.
The USD/JPYs pair fell as little as 0.01% to 104.14. Next, AUD/USD rose slightly by 0.07% to 0.7417. The situation was triggered by the AUD receiving a boost from Westpac Consumer Sentiment (WCS) in December this year. The spike is becoming very high.
Market News on Currencies
Still about WCS, the spike some time ago to 4.1%. The progress was the highest over a decade. This is especially true if you compare it to a 2.5% spike in November. What about other currency movements?
The NZD/USD pair fell slightly by 0.01% to 0.7039. Meanwhile, the GBP/USD edged up 0.10% to 1.3367. The pound is still struggling to get out of its lows in recent months. This is influenced by Brexit talks currently deadlocked.
Some can now wait to see if the moment of dinner between British Prime Minister Boris Johnson and European Commission President Ursula von der Leyen in Brussels will achieve what negotiators cannot achieve. If dinner fails, Britain must prepare for the worst possible outcome.
The deal, for example, is with the E.U. if a consensus is not reached before the year-end deadline. Chris Weston of Pepperstone sees a skewed risk that Johnson will succeed in making a deal. According to him, consensus still looks difficult.
Elsewhere, Steven Mnuchin Gets Big Attention
Across the Atlantic, everyone is now highlighting Treasury Secretary Steven Mnuchin. It is especially after his statement on Twitter on Tuesday. Mnuchin said he had spoken with House Speaker Nancy Pelosi about a $916 billion bid for the COVID-19 aid bill.
That number is indeed slightly higher than the $908 billion packages previously proposed by a bipartisan group of lawmakers the previous week. However, no one knows for sure whether the figure will make the two sides reach an agreement or not.
Meanwhile, the focus is also on the European Central Bank (ECB) and the Fed. It was reported that both will submit their final policy decisions for 2020 on Thursday. For the ECB in particular, investors are very curious about their opinions and decisions due to the euro.
For information, previously the Euro has risen by 8% in 2020. It will be a very difficult task for the central bank to make the Euro currency weaker. This was conveyed by ING strategists in a note some time ago based on several parameters.
What Makes the Euro Higher?
In fact, there is indeed a risk that the bias of press conferences will push the euro higher. This is especially so if future guidance beyond the December easing package is not particularly strong. Elsewhere, it seems that investors are now remaining cautious about the dollar.
It is especially about its short-term prospects. The uncertainty surrounding Brexit, the progress of the fiscal spending package through the US Congress, and the outcome of the ECB meeting on Thursday will keep market participants cautious for a while.
Meanwhile, oil prices reportedly fell slightly on Wednesday. This is related to an unexpected spike in U.S. oil inventories last week. However, the positive news about the COVID-19 vaccine has made investors optimistic about the recovery in fuel demand and limiting losses.
