G-10 currencies rise as US dollar dips

The global recovery buy everything trade didn’t fully impact Asian stock markets today, but it was notable in forex markets. Asian currency traders spent the day rotating out of US dollars and into other G-10 and regional currencies. That pushed the dollar index 0.30% lower to 90.06. The dollar index has now traced out a series of lower daily highs over the past week, since spiking to 91.00. A failure of support at 89.70 should confirm the next structural move lower in the US dollar is starting. We may need to wait until the Georgia primaries next week, on January the 5th, have passed.

Both EUR/USD and GBP/USD have risen 0.30% to 1.2250 and 1.3490 respectively today. EUR/USD is nearing resistance at 1.2270, targeting 1.2400 initially. Resistance for sterling is more distant at 1.3625. Brexit and Covid-19 concerns, as well as a market massively long are combining to cap gains. If the start of Brexit passes without incident early next week, sterling is poised to restart its uptrend. The imminent approval of the Astra/Zeneca vaccine by the UK government should underpin and move lower.

Asian currencies have resumed their advances versus the US dollar, with the Thai baht, Singapore dollar and Indian rupee climbing 0.30% today. The Philippine peso, Chinese yuan and Malaysian ringitt have held steady. The pro-cyclical Australian and New Zealand dollars have risen 0.25% and 0.35% respectively to 0.7600 and 0.7125. Both are nearing their December highs and look set for higher levels into the end of the week.

Although both liquidity and volumes are much reduced on currency markets this week, the US dollar fall has been a steady one. Stimulus and the global recovery themes are trumping concerns elsewhere, and the greenback continues to look like a sell on any rally.