Pound (GBP) Supported by Second Covid-19 Vaccine Approval
The Pound (GBP) found renewed support yesterday after the Brexit trade deal passed in the UK Parliament.
Sterling was also supported by the Oxford-AstraZeneca vaccine’s approval for use in the UK, with the government ordering enough to cover the entire population.
However, with some uncertainty surrounding the financial and service sectors’ position in the UK-EU trade agreement, GBP exchange rates could be vulnerable to some Brexit-related jitters as the year comes to a close.
Euro (EUR) Dented amid Risk-On Trade
The Euro (EUR) stumbled against many of the majors yesterday as risk-on trade prevailed.
EUR exchange rates also came under pressure as coronavirus cases continue surging in Europe and restrictions tighten in some Eurozone countries. However, the Euro later found some support from its correlation with the US Dollar and the news that the EU and China agreed, in principle, on a new investment treaty.
US Dollar (USD) Slips as Stimulus Hopes Buoy Risk Appetite
The US Dollar (USD) continued shedding ground across the board yesterday as the safe-haven selloff continued in the face of optimism over US fiscal stimulus.
November’s advance goods trade deficit widening more than anticipated piled further pressure on the ‘Greenback’. The deficit highlighted the continued pressure coming to bear on the US economy, with weaker trade conditions likely to drag on overall growth.
With forecasts pointing towards another weekly increase in initial jobless claims the US Dollar could face a fresh bout of selling pressure.
Canadian Dollar (CAD) Fails to Capitalise on Oil Market Strength
The Canadian Dollar (CAD) struggled to capitalise on the relative strength of the oil market yesterday, losing out to some of its other commodity-correlated rivals.
In the wake of a larger-than-forecast drawdown in US crude oil inventories reported by the American Petroleum Institute (API), the global oil market held onto a positive bias.
Australian Dollar (AUD) Holds Gains Thanks to Market Optimism
The Australian Dollar (AUD) continued to benefit from an elevated sense of market risk appetite as the New Year approached.
As the AstraZeneca Covid-19 vaccine will soon be rolled out in the UK, markets found fresh cause for confidence during the penultimate trading session of 2020. The relative weakness of the US Dollar and underwhelming US trade data also helped to shore up the risk-sensitive Australian Dollar.
However, slightly disappointing Chinese manufacturing and non-manufacturing PMIs did take some of the shine off AUD exchange rates.
New Zealand Dollar (NZD) Shored Up by Risk Appetite
The New Zealand Dollar (NZD) remained on a stronger footing thanks to the risk-positive outlook of investors and thin global trading volumes.
With higher-yielding assets in demand thanks to the weaker US Dollar and underwhelming US data, the ‘Kiwi’ found additional encouragement.