US Dollar dips, faces headwind as Brexit trade deal closes in; Sterling hits $1.36



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US Dollar dips, faces headwind as Brexit trade deal closes in; Sterling hits $1.36

On Thursday, the US Dollar Index (DXY) measured against a basket of six major currencies had been trading lower after snapping its three-day long streak of gain on yesterday, as a US Dollar-buying spree seemed to have blunted by an abrupt hike in risk appetite over expectations of an imminent Brexit trade deal alongside a $892 billion in US pandemic stimulus package.

In point of fact, latest development over the Brexit frontier has been a major market mover with the British currency trading as much as 0.77 per cent higher to $1.3607 on Thursday’s morning European trading hour, while on Wednesday, sterling and euro had started off an Apollonian rally shortly after the Brexit headlines, dampening a safe-haven bid for the American currency.

With the greenback shedding as much as 0.9 per cent against its British counterpart alongside 0.2 per cent against the bloc’s common currency euro, major currencies knotted to higher risk appetite such as the Australian, New Zealand and Canadian dollars had gained ground on Wednesday, while UK and EU were standing on the brink of striking a narrow trade deal that would avert a chaotic split of Britain from the EU, prevailing a perilous pommelling of a 70-year-old European stronghold which in effect would have rattled the European unity forged upon the wrecks of World War II.

Aside from that, although the incumbent US President Donald Trump had vetoed the much-required US stimulus bill defying Republican Senators, surprising many of his close allies in the Oval Office including the Treasury Secretary Steven Mnuchin, the bill is expected to become a law after ten days following a re-voting in the Senate despite Trump's veto.

Dollar drops, Sterling hits $1.36

Citing statistics, while this report was being prepared, in early-morning European trading hour, GMT. 10.15, the bloc’s common currency euro was trading 0.12 per cent higher to $1.2203 and the British Pound gained as much as 0.77 per cent to $1.3607, while the Aussies were trading 0.30 per cent higher to $0.7601 against the greenback and the Kiwis rose 0.19 per cent to $7107.

Besides, the American Dollar Index (DXY), measured against a basket of six major currencies, faltered to 90.12 after experiencing a steep downfall of 0.30 per cent to 90.33 on Wednesday’s FX market winddown. Meanwhile, citing prospects of further faltering of an ailing American currency, a Senior FX strategist at TD Securities in New York, Mazen Issa said, “We have a lower uncertainty premium compared to March.

The addition of the vaccines...has basically established what we have known since the summer which is a weaker dollar”.