The U.S. Dollar Index is largely unchanged but there were fairly significant moves over a few crosses.
Overview
Light trading conditions and thin liquidity are likely the culprits for the moves. Global risk sentiment is solidly in the green and the S&P 500 may reach all-time highs during today’s session. Despite steep sell-offs at points earlier in the month, equities are experiencing a late “Santa Clause rally” to close the year. The new optimism comes after three different studies showed that omicron is less likely to lead to hospitalization which benefits the long-term outlook. However, in the near term, some analysts point to the rapid spread and the strain it is putting on hospitals around the holidays. With many markets closed tomorrow, there is a data dump on today’s docket although much of it matched expectations. Both personal income and personal spending met expectations in November, rising 0.4% and 0.6% respectively. Weekly jobless claims were also unchanged at 205K, a healthy level for the labor market. Durable goods orders did surprise to the upside, coming in at 2.5% in November instead of expectations of a 1.8% rise. The greenback has had a muted reaction to the data.
What to Watch Today…
- Existing Home Sales at 10 a.m.
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AUD
The Australian dollar popped half a percent higher before giving back half of those gains overnight. The currency is usually a beneficiary of “risk-on” trading and today was a good example. MSCI Asia Pacific Index gained nearly 1.0%. There was no fundamental data to pin the move on. The jerky price movements are no surprise in the current illiquid market.
GBP
The British pound jumped more than half a percent overnight and is now 1.6% higher over the past three sessions. Globally, investors are increasing bets that omicron will not derail growth. Yesterday’s British data surprised to the upside, improving sentiment. As such, money market traders are increasing Bank of England interest rate hike bets. Markets now see a rate of 1.25% by the end of 2022, up from the current 0.25%. GBP/USD is now at its highest level since November 24th.
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