Selloff in the Dollar was the main theme in the currency markets last week. With the arrival of coronavirus vaccines, the global economy looks set to return to normal next year, despite some cautious comments from central bankers. Yen might look worst than Dollar but it is indeed still holding above near term support against most major currencies. Canadian Dollar was the strongest one as boosted by upside breakout in oil prices, as well as solid job data. Euro and Swiss Franc closely followed as next strongest, while Sterling was not too far away. Australian and New Zealand Dollar ended mixed, with Aussie weighed down by rising tensions with China. Recent decline in the greenback was accompanied by steady rally in treasury yields, and strength in Asian markets in general. While some funds flowed into US stocks to fuel the record runs, at least part of them should have flowed into Asia. As Dollar index's down trend resumed, there is prospect of some near term recovery near 90 handle. But that's subject to a retreat in risk appetite, and as Gold is rejected by 1850 resistance. On the other hand, China's Shanghai SSE poses some upside risk to Asian stocks, which could in turn draws more funds out of the US, thus triggers deeper selloff in the greenback. |