Dollar Extends Losses, Pound Plunges on Brexit


The dollar index, which measures the strength of the US dollar against a basket of major currencies, tumbled sharply to its lowest levels, since April 2018, trading at 91.10. The strong risk appetite is supporting the flow into riskier currencies, and it was clear from the performance of the euro and commodity currencies. On the other hand, the chatters over fiscal stimulus weighed on the dollar too. The US Treasury Secretary Steven Mnuchin declared that top republicans agree on targeted fiscal stimulus. Also, Federal Reserve Chairman Jerome Powell stated in his testimony over COVID19 that the Fed is not willing to unwind its monetary policy before the economy is back to pre-pandemic levels hinting at 10million US citizens still without a job. The EURUSD rallied to $1.2087 for the first time in more than a two-and-a-half-year, and the NZDUSD extended race higher trading at $0.7084.


The British pound declined against rivals as Barnier announced no development in Brexit talks. Following yesterday's rally on dollar weakness, the pound lost gains, as the Chief EU Negotiator told EU envoys that the three main issues (level playing field, governance, and fisheries) remain unresolved. The GBPUSD declined to $1.3344 from $1.3440, and the EURGBP rose to 0.9044.


Major US stock index futures edged higher during the Asian session on Powell's comments in prepared testimony. The Federal Reserve released the comments of Chairman Powell ahead of the two-day testimony, which confirmed that the Federal Reserve is committed to using its full range of tools to support the economy to recovery to pre-pandemic levels. It is good to note that stock benchmarks around the world had a great performance during November on vaccine headlines, which sparked optimism and risk appetite. The Dow Jones Industrial Average futures rose to 29917, the S&P500 futures rallied to 3659, and Nasdaq advanced to 12399.


Precious metals prices held steady following yesterday's sharp rally. The price of a gold ounce is hovering near 1814 after testing a resistance zone of $1818. Meanwhile, the price of a silver ounce eased to $23.55, and palladium futures edged higher to $2430.


Oil prices fall as investors await OPEC+ meeting. Top oil producers are expected to meet again to decide whether they want to extend current cuts or add 1.9 million barrels to the market supply. On the other hand, the American Petroleum Institute reported a buildup of 4.146 million barrels in US inventories. The US Energy Information Administration will report the official numbers later today. The West Texas Intermediate crude January delivery dropped to $43.90, and Brent Blend February delivery dipped to $46.81.

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