Daily Currency Update

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The British Pound nailed the coffin shut on the Greenback, as the Greenback failed to bounce and touched a new 165 day low

USD - United States Dollar

Key risk-on event stories for today include the U.S./China deal, the U.K. election and resolution of Brexit, ECB Lagarde making it clear she wants a greater fiscal boost, and likely less negative rates. The winning currencies were the British Pound and the Aussie dollar.

President Trump's approval of a phase-one trade deal with China helped the Aussie dollar to rise 1.0 and 0.90 percent versus the U.S. dollar and the Loonie respectively, compared with yesterday's trading session open to the highest level in overnight trading. President Trump agreed to a limited trade deal, which would include the purchase of $50 billion in agricultural products by Beijing in 2020, along with energy and other goods. Additionally, the U.S plans on cancelling tariff rates on Chinese goods and the new tariffs set for Sunday; the current tariff rates range from 15 to 25 percent. However, none of China's media outlets involved in the trade negotiations made any public statement overnight about the deal endorsed by President Trump. According to the WSJ, Foreign Ministry spokeswoman Hua Chunying referred only to how news of the agreement helped fuel a surge in U.S. stocks. Ms. Hua didn't confirm the existence of a deal.

U.S. retail sales increased less than expected in November, showing that American consumers are cutting back on discretionary spending. The number came in at 0.1 versus the forecast of 0.4 percent.

Key Movers

The Conservatives swept back to power in the U.K. general election with the most significant majority since Margaret Thatcher's landslide in 1987, which could reach as many as 79 seats when all the votes are counted later today, prompting a surge in the Pound. The Sterling rallied by around 2 - 2.2 percent against the U.S. dollar – on the back of exit polls predicting a big win for the Conservatives. At the time of writing, one seat was left to be declared, with the Conservatives holding 364 seats, Labour 203, the SNP 48 and the Liberal Democrats 11. The latter's now-former leader Jo Swinson lost her seat to the SNP, capping a miserable night for both the Lib Dems and Labour. Sterling's sharp rise is a direct response to greater clarity about Brexit, as Boris Johnson's deal is now expected to be passed in Parliament thanks to his Commons majority. The GBP/USD and GBP/CAD pairs traded up by 2.6 and 2.5 percent around 5:45 pm EST yesterday; however, profit-taking is pushing these two pairs lower from their highs at 1.3515 and 1.7792, trading now at 1.3340 and 1.7570 respectively.

The USD/CAD has traded within a narrow range between 1.3145 and 1.3191 over the last two days. Yesterday, Poloz confirmed that the trend in the jobs market has been positive with more evidence of wages increasing. Additionally, global indicators seem to be bottoming.

Expected Ranges

USD/CAD: 1.3145 - 1.3191 ▼

EUR/USD: 1.1116 - 1.1192 ▼

GBP/USD: 1.3233 - 1.3400 ▼

AUD/USD: 0.6880 - 0.6924 ▲

NZD/USD: 0.6585 - 0.6629 ▲