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One last gift to the US: a weak dollar today

USD - United States Dollar

With one last day as Donald Trump as President of the United States, the demand for the US dollar was down.

His replacement, President-elect Joe Biden, has proposed a $1.9 trillion stimulus package to jump start household spending. Equity markets, anticipating the boost, have reached record levels. And with the Federal Reserve pushing lower interest rates, the currency exchange markets anticipate short-term near zero interest rates. Incoming Treasury Secretary Janet Yellen, at her confirmation hearing this morning, said that the value of the dollar should be market determined and that the US does not seek a weaker dollar.

Whether she wants it or not, the US has a weak dollar. Demand was down this morning against the euro, Great British pound, and Australian dollar. Demand for USD outstripped demand for its Canadian counterpart for a moment this morning before dwindling.

Key Movers

The UK’s strictest lockdowns measures are ending, and many expect GBP to rise. GBP remained under 1.3600 against USD for most of yesterday, falling to levels as low as 1.3520. This morning, the pair has been trading above 1.3600 again, ahead of a UK inflation data released tomorrow morning. The pound is up almost 5% against the dollar over the past 3 months. The momentum depends on the benefits of the UK’s vaccination start. Any setbacks could delay the economy’s reopening.

Having slipped below 0.77 US cents into the close last week the AUD struggled to arrest the downtrend through trade on Monday, tracking toward intraday lows at 0.7659. With little of note on the domestic docket to drive direction the AUD succumbed to a broader sell off across commodity currencies as a renewed souring in risk demand forced investors toward haven assets. Short term headwinds continue to outweigh medium term optimism as the pandemic worsens extending the timeline for recovery. Our attentions today remain with market. With the USD building off last week’s rebound and extending off 3-year lows we will be looking for any signal that risk demand will improve through the week.

Expected Ranges

EUR/USD: 1.207 - 1.214 ▼

GBP/USD: 1.357 - 1.362 ▼

AUD/USD: 0.767 - 0.772 ▼

USD/CAD: 1.272 - 1.276 ▼