NZD test 0.70 amid USD weakness and a shift in as interest rate expectations

Key Movers

The US dollar, Japanese Yen and Swiss franc all shifted lower overnight as risk sentiment surged and the narrative shifted away from short term headwinds after President Trump acknowledged the head of the General Services Administration should begin the transition to a Biden led government. While the President assured supporters they will continue to challenge the election result the removal of the threat of a hostile transition of power eliminates another risk barrier weighing on currency markets. The dollar index fell three tenths of a percent and closed in on Monday’s three-month low at 92.013. With key technical supports at 92 still intact another surge in risk sentiment and a break below this threshold could open the door to further declines and an extension in the downward shift. With the Euro and GBP enjoying gains on the back of broader USD weakness attentions remain affixed to the ongoing risk narrative. With Brexit negotiations expected to yield at least a partial trade agreement as early as Friday another risk barrier could well be removed in the coming days opening the door for another assault on 1.20 for the Euro and a break above 1.34/35 for Sterling.