Dollar slips as risk-appetite returns at year-end

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Dollar slips as risk-appetite returns at year-end

American dollar had faltered across the board for the second consecutive session on Friday, the 26th of December, as an intransigent hope of a Sino-US trade deal that would put an end to an 18-month-long rancorous trade row had uplifted investors’ morale and heightened up risk-appetites by a considerable margin, slumping demands for the US Dollar.

On top of that, as traders had been in to their desk on Friday (December 27th) following Christmas and Boxing day holiday after stomaching fairly upbeat trade remarks from top negotiators of both Beijing and Washington, global FX market had witnessed a havoc-scale sell-off of the US Dollar which eventually had catapulted almost all of the major currencies against the American Dollar.

Besides, the US Dollar index (DXY) measured against a basket of six major currencies on an average fell by 0.49 per cent to wrap up the day at 97.05, while the US Dollar fell 0.72 per cent against Euro to $1.1175 and 0.68 per cent against the British currency to $1.3078.

Apart from that, the American currency remained almost unchanged to safe-haven Japanese yen to 109.41 yen per US dollar, but was hit with a whiplash of 0.66 per cent against another safe-have major, Swiss Franc to wrap up the day at $0.9740, a level never witnessed since the late-August this year.

Meanwhile, over optimisms of a Sino-US trade deal alongside a pick-up in China’s industrial growth, Chinese export dependent Australian currency gained 0.47 per cent to $0.6977 against the American dollar, while the US Dollar shed 0.34 per cent to $1.3076 against the crude oil price dependent Canadian dollar amid a stubborn rise of crude oil futures’ prices over the week.

Meanwhile, expressing a fairly upbeat optimism over a US Dollar rally in the new year despite Friday’s (December 27th) steep downfall, an analyst at Action Economics wrote in a client note on Friday’s (December 27th) session closure, “The dollar has declined against a backdrop of coursing risk-on sentiment in global equity markets with investors anticipating the U.S.-China Phase 1 trade deal to be signed-off on soon, which will come amid a world of expansive monetary policy and benign inflation. ”