The U.S. dollar is under pressure as traders from around the world return to their desks after a two-day Christmas holiday.
Overview
Overall the Bloomberg Dollar index fell 0.2% with the bulk of the loss coming against the sterling. The Index is now down 1.3% this month. Risk sentiment has improved in December and equity markets have reached record highs on improved economics outlooks, cooler trade tensions and some clarity around Brexit, reducing the demand for the dollar as a safe haven.
There is no fundamental data or Fed speakers on today’s docket so expect the greenback to continue to ebb and flow with the overall risk sentiment.
What to Watch Today…
- No major events scheduled for today.
Complete Economic Calendar can be found here.
EUR
The Euro drifted higher overnight, adding 0.5% of strength versus the U.S. dollar. The common currency has gained 1.2% versus the greenback during December and we expect that trend to continue into early 2020. Other traders seem to also be coming around to our way of thinking. According to a Bloomberg survey, analysts expect the Euro to rise 4.0% in 2020.
GBP
The British pound was the big winner overnight, gaining nearly a full percent versus the U.S. dollar in thin market conditions. As trading gets back into full swing next week, the question will be can the sterling hold on to and extend its gains? Or will the pressure of a 12-month deadline for the U.K. to secure a trade deal with the EU be too much for the sterling and cause it to float lower? Our 2020 forecast has the sterling strengthening slightly throughout 2020.
