Australian Dollar (AUD) Firms in Risk-On Trade
The Australian Dollar (AUD) started on the back foot Wednesday, amidst a knee-jerk reaction to Donald Trump’s threat not to sign the new US stimulus bill. However, market sentiment quickly recovered on the expectation the stimulus would be passed anyway, as well as the positive mood in Europe amidst hopes a Brexit deal was close.
Turning to today’s session, trade in the Australian Dollar is likely to be thin as markets begin to wind down for the Christmas holidays.
Pound (GBP) Soars as Brexit Deal ‘Imminent’
The Pound (GBP) rocketed higher in mid-week trade, amidst multiple reports that a Brexit trade deal between the UK and EU was imminent. These same reports suggest that EU officials will immediately begin preparing to approve a provisional application of the deal to ensure the agreement is in effect from 1 January next year.
However this was tempered somewhat by the announcement that more areas of the UK would face tougher coronavirus from Boxing Day.
Barring any last-minute setbacks to the deal, the relief that the UK will not face a cliff-edge Brexit in the new year is likely to ensure the Pound remains well supported in what would otherwise be thin trading conditions today.
Euro (EUR) Buoyed by Upbeat Trade
The Euro (EUR) found some modest support on Wednesday as the single currency also benefitted from the optimism surrounding Brexit. Further buoying the Euro was the improvement in market sentiment as France lifted its ban on UK freight.
Much like the Pound, the Euro is likely to remain supported by Brexit optimism through today’s trading session, so long as a deal is agreed.
US Dollar (USD) Slides as Trump Fails to Derail US Stimulus Optimism
The US Dollar (USD) trended lower through yesterday’s trading session, as market remained confident the next US stimulus package will be passed in spite of opposition from Donald Trump. Further undermining the ‘Greenback’ was data showing a sharp contraction in personal income in November, stoking concerns that the US economic recovery could stall in the coming months as households are forced to tighten their purse strings.
This downtrend in the US Dollar may persist through today’s session as well if we see the market mood remain broadly upbeat.
Canadian Dollar (CAD) Strengthens as GDP Prints Above Expectations
The Canadian Dollar (CAD) trended higher on Wednesday, following the publication of Canada’s latest GDP figures as domestic growth printed slightly above expectations, which alongside a rebound in oil prices helped to bolster the appeal of the ‘Loonie’.
New Zealand Dollar (NZD) Accelerates amid Positive Mood
The New Zealand Dollar (NZD) also strengthened through yesterday’s trading session as demand for the risk-sensitive ‘Kiwi’ was bolstered in light of the improving market mood.