On December 4, the U.S. dollar was headed for its worst week in a month after plumbing a two and a half year low. According to investors, the dollar will decline further, and that the worst of the coronavirus pandemic could be over within months.
Significantly, the positive vaccine news has supported lift a rally in riskier currencies, Federal Reserve’s actions have weakened the dollar. Moreover, the greenback touched a low of 90.504 on December 3, which dropped by over 1% during the week. The U.S. dollar was flat on the day at 90.628
According to MUFG analysts, it was another terrible week for the greenback. It will prompt speculators to rebuild short dollar positions that have been pared in the last months.
Furthermore, the euro was the winner from recent dollar weakness as it broke above $1.20 this week and is on track for an over 2% weekly gain. On Friday, the euro increased by 0.2% and settled at $1.2168.
That’s the first time euro stands over $1.21 since spring 2018
According to Jane Foley, the strategist at Rabobank, that’s the first time euro stands over $1.21 since spring 2018, even though there is only a week remained before the European Central Bank is likely to add more policy stimulus.
Besides, on December 4, the yen was steady versus the greenback. The British pound declined against the dollar and euro as Bretix talks between Britain and the European Union is at a critical stage.
Additionally, the British pound was declining on Friday, despite the fact that it reached its one-year high in the previous session. Uncertainty is growing, that the United Kingdom will be capable of clinching a post-Brexit trade deal with the European Union by the end of December.
Significantly, on Friday, European Council President Charles Michael announced that the European Union is still negotiating a trade deal with the UK. Besides, the European Council meeting will be held on December 10.
On Thursday, the Sterling increased to a one-year high close to $1.35 as the greenback selloff gathered momentum.
The United Kingdom’s upper house of parliament voted last month to withdraw clauses in the Internal Market Bill. Remarkably, that broke international law. Still, the government plans to reinstate them in the lower chamber on December 7. It would complicate negotiations with Brussels, which has protested against it.
The British sterling declined by 0.2% and settled at $1.3424. It dropped by 0.4% against the euro at 90.65 pence.