The US dollar[3] basket (DXY) hit lows last seen over two-and-a-half years ago this week as relentless selling kept forcing the value of the greenback lower. The backdrop for the US dollar has been deteriorating lately as the Federal Reserve continues to send out signals that it will keep monetary policy ultra-accommodative until a pick-up in the US economy is well underway. In addition, the expected roll-out next of a vaccine inoculation plan in the UK is boosting hopes globally that a cure for Covid-19 could soon be available to all, fuelling a risk-on move in the market and further dampening the allure of the haven US dollar. Further, recent reports that talks on a fresh US stimulus bill are ongoing and that an announcement may be made soon added an extra layer of risk appetite.
The Federal Reserve is expected to announce that it will purchase more longer-dated US bonds at the December 15/16 FOMC[4] meeting. The Fed will continue in its efforts to keep longer-term interest rates lower to help consumer borrowing and boost the ailing jobs market. The latest US Jobs Report (NFP) highlighted the weakness in the jobs market with 245k new roles created in November, missing estimates of 469k, and October’s downgraded print of 610k from an original release of 638k.
US Dollar Whipsaws on Soft Non-Farm Payrolls Report[5]
The US dollar basket (DXY) chart shows not just the ongoing weakness in the greenback but the acceleration lower this week. Lower highs and lower dominate the chart and
