Dollar dithers on Brexit, U.S. stimulus, ECB meeting

Published On: December 9, 2020Categories: Stocks & Shares1.3 min read

The dollar sat at 90.923 against a basket of currencies, which is nearly half a percent above a two-and-a-half-year low it hit on Friday

The dollar earned a reprieve from selling pressure on Wednesday as traders paused to weigh risks ahead, ranging from Brexit trade talks in Brussels to Congress’ wrangling over a pandemic relief package and a looming European Central Bank meeting.

Sterling, which has whipsawed while trade negotiations are deadlocked, steadied above recent lows at $1.3365 early in the Asia session.

Its fate now rests on whether a dinner between British Prime Minister Boris Johnson and European Commission president Ursula von der Leyen in Brussels can deliver a breakthrough.

Other majors mostly held their ground, and the euro and the Antipodean currencies took a breather after long rallies.

Against a basket of currencies the dollar sat at 90.923, which is about half a percent above a two-and-a-half-year low it hit on Friday as short sellers piled in.

Things are just stalled at the moment, but they haven’t changed, said Westpac currency analyst Imre Speizer.

Uncertainty around Brexit, around the progress of a fiscal spending package through U.S. Congress and around the outcome of Thursday’s ECB meeting have traders temporarily cautious, he said.

We think risk sentiment is going to stay strong, he added. But there’s a few potential spanners in the works, so people are thinking: ‘Lets just hold off pushing the market even higher,’ and that’s why everything’s just stopped where it is.

The Australian dollar found support from decade-high consumer sentiment, but struggled to advance very far and sat at $0.7441. The kiwi held at $0.7041.

The Japanese yen weakened slightly against the dollar overnight and held there on Wednesday at 104.15 per greenback.

About the Author: Jonathan Adams

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