FILE PHOTO: U.S. dollars and other world currencies lie in a charity receptacle at Pearson international airport in Toronto, Ontario, Canada June 13, 2018. REUTERS/Chris Helgren/File Photo
December 23, 2020
By Gertrude Chavez-Dreyfuss
NEW YORK (Reuters) -The dollar slipped on Wednesday, after gaining for three straight sessions, as risk appetite rose on the expectation of an imminent Brexit trade deal between the UK and the European Union.
Sterling and the euro took off against the greenback after the Brexit headlines, as did currencies tied to higher risk appetite such as the Australian, Canadian, and New Zealand dollars.
Britain and the European Union appeared close to clinching a long-elusive trade agreement on Wednesday. A reporter with Britain’s Daily Mail said a deal had already been done, and speculation flew that British Prime Minister Boris Johnson would make an announcement on Wednesday evening.
U.S. Treasury yields rose in the wake of the Brexit news, in line with those in Europe and the UK.
In afternoon trading, the dollar fell 0.1% to 90.39.
The dollar index has weakened more than 6% this year as investors bet the U.S. Federal Reserve will keep its monetary policy ultra-accommodative. Expectations for further declines by the dollar are helping buoy stock markets and emerging-market currencies.
“We have a lower uncertainty premium compared to March. The addition of the vaccines…has basically established what we have known since the summer which is a weaker dollar,” said Mazen Issa, senior FX strategist, at TD Securities in New York.
David Rosenberg, chief economist and strategist at Rosenberg Research in a research note said technical measures suggested an increasing likelihood of an oversold bounce in the dollar.
“Longer-term, the dollar remains negative — trend, moving averages and intermediate-term momentum all remain in downtrends,” he added.
U.S. data, meanwhile, was mixed on Wednesday but had little currency impact.
Initial jobless claims unexpectedly fell last week, though remained elevated, and a separate report showed consumer spending fell last month for the first time since April. U.S. new home sales were disappointing as well.
The euro rose 0.2% to $1.2180. The single currency earlier this month hit its highest in more than two-and-a-half years.
Sterling extended gains versus the dollar, rising above $1.35. The pound which had earlier firmed on the lifting of a French border blockage, last traded up 0.9% at $1.3482. Against the euro, the pound jumped 0.8% at 90.33 pence.
The Brexit headlines overshadowed President Donald Trump’s threat to veto the U.S. stimulus bill. Trump said the long-awaited stimulus package should be amended to increase the amount in the stimulus checks — potentially disrupting the bill.
Elsewhere, the Australian dollar gained 0.7% against the dollar to US$0.7575, boosted in part by signs that a small COVID-19 outbreak in Sydney would be contained. The New Zealand dollar also rose 0.7% to US$0.7091.
Currency bid prices at 3:05PM (2005 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Dollar index 90.3980 90.4660 -0.07% +0.00% +90.6710 +90.1510
Euro/Dollar $1.2180 $1.2162 +0.16% +8.66% +$1.2221 +$1.2155
Dollar/Yen 103.5900 103.6150 -0.03% -4.69% +103.6450 +103.3550
Euro/Yen 126.16 126.04 +0.10% +3.45% +126.3800 +125.9400
Dollar/Swiss 0.8890 0.8893 -0.05% -8.15% +0.8911 +0.8870
Sterling/Dollar $1.3482 $1.3377 +0.78% +1.64% +$1.3569 +$1.3361
Dollar/Canadian 1.2856 1.2908 -0.40% -1.03% +1.2914 +1.2835
Aussie/Dollar $0.7574 $0.7520 +0.73% +7.96% +$0.7591 +$0.7519
Euro/Swiss 1.0827 1.0818 +0.08% -0.23% +1.0858 +1.0812
Euro/Sterling 0.9031 0.9101 -0.77% +6.83% +0.9109 +0.9003
NZ $0.7090 $0.7043 +0.67% +5.36% +$0.7103 +$0.7031
Dollar/Norway 8.6525 8.7390 -1.14% -1.51% +8.7545 +8.6350
Euro/Norway 10.5400 10.6172 -0.73% +7.14% +10.6610 +10.5256
Dollar/Sweden 8.2955 8.3487 -0.35% -11.26% +8.3529 +8.2781
Euro/Sweden 10.1039 10.1391 -0.35% -3.49% +10.1640 +10.0993
(Reporting by Gertrude Chavez-Dreyfuss; Editing by Louise Heavens and Cynthia Osterman)