The U.S. Dollar index is little changed this morning, but the dollar did slip against the British pound and a basket of commodity currencies.
Overview
After tanking hard over the past few trading session, risk appetite is enjoying some respite this morning. For example, the S&P 500 has lost over 3% of its value over the past three sessions, but futures show the index will regain 1% at the open. Some market analysts are pointing to renewed hope that President Biden’s “Build Back Better” bill still has life as the reason for today’s rebound. Senator Joe Manchin and President Biden are still talking so there is still some hope in some circles that a deal could be done.
Others are pointing to hope that vaccines and particularly boosters will combat the Omicron variant. Or perhaps it is a case of simple “buying the dip.” Regardless, the risk rally is on today and may eat at the dollar’s recent ascent.There is no top-tier data on the domestic agenda today. We will carefully watch President Biden’s remarks on the state of the battle with Covid at 2:30 p.m.
What to Watch Today…
- No major economic events scheduled for today
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CAD
Commodity-based currencies have seen their fortunes turn around overnight, with most recouping their losses from yesterday’s session. The Norwegian krone and New Zealand dollars were the best performers after losing over half a percent versus the greenback yesterday.
This currency basket’s outlook has been tied heavily to global risk sentiment. The equation has been simple, higher equities equal stronger commodity-backed currencies. WTI jumped 2.0% overnight, adding to the strength of the Norwegian krone and Canadian dollars.
GBP
The British pound is up slightly today, erasing losses from yesterday’s session. GBP/USD is down 0.5% over the last three days and down 1.0% over the past month. Traders will be watching developments from Downing Street. Prime Minister Boris Johnson is said to be debating fresh covid restrictions right ahead of the Christmas holiday to stem the spread of the virus.
Some policy watchers have predicted that the PM would not introduce measures ahead of Christmas, but instead, might make further announcements on December 27th ahead of the New Year.
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