Dollar Extends Losses, Pound Plunges on Brexit

USD

The dollar index, which measures the strength of the US dollar against a basket of major currencies, tumbled sharply to its lowest levels, since April 2018, trading at 91.10. The strong risk appetite is supporting the flow into riskier currencies, and it was clear from the performance of the euro and commodity currencies. On the other hand, the chatters over fiscal stimulus weighed on the dollar too. The US Treasury Secretary Steven Mnuchin declared that top republicans agree on targeted fiscal stimulus. Also, Federal Reserve Chairman Jerome Powell stated in his testimony over COVID19 that the Fed is not willing to unwind its monetary policy before the economy is back to pre-pandemic levels hinting at 10million US citizens still without a job. The EURUSD rallied to $1.2087 for the first time in more than a two-and-a-half-year, and the NZDUSD extended race higher trading at $0.7084.

GBP

The British pound declined against rivals as Barnier announced no development in Brexit talks. Following yesterday's rally on dollar weakness, the pound lost gains, as the Chief EU Negotiator told EU envoys that the three main issues (level playing field, governance, and fisheries) remain unresolved. The GBPUSD declined to $1.3344 from $1.3440, and the EURGBP rose to 0.9044.

Equities

Major US stock-index futures eased slightly after S&P500 and tech-heavy Nasdaq posted a new record high. The optimism over vaccine distributions as soon as possible is bolstering risk sentiment, and driving stocks to new highs. Moreover, the revival of fiscal stimulus hopes, along with the Fed's confirmation of doing more work to boost economic activity, support the current trend. The S&P500 futures hovered near 3658, the Nasdaq futures held steady near 12420, while Dow Jones Industrial Average futures drifted lower to 29680.

Metals

Precious metals prices held steady following yesterday's sharp rally. The price of a gold ounce is hovering near 1814 after testing a resistance zone of $1818. Meanwhile, the price of a silver ounce eased to $23.55, and palladium futures edged higher to $2430.

Oil

Oil prices fall as investors await OPEC+ meeting. Top oil producers are expected to meet again to decide whether they want to extend current cuts or add 1.9 million barrels to the market supply. On the other hand, the American Petroleum Institute reported a buildup of 4.146 million barrels in US inventories. The US Energy Information Administration will report the official numbers later today. The West Texas Intermediate crude January delivery dropped to $43.90, and Brent Blend February delivery dipped to $46.81.

Major Economic Events