Massive auctions in the US and global risk-on weaken the USD

On Thursday, markets remain calm as no important headlines are on the table, however, the greenback again lost some ground paving the way for EURUSD rise. The most popular currency pair opened the day under the 1.1800 mark but then strengthened, easily took the round figure, and now sits comfortably in the 1.1830 region.

Yesterday, investors sold off treasuries amid massive bond auctions in the US, which boosted bond yields and the American dollar. However, today that debt was issued at a relatively high yield so bonds attracted traders again, which put pressure both on the yields and the USD. EURUSD enjoyed the greenback’s weakness and rallied.

Moreover, the impasse in the US Congress still persists. Democrats and Republicans still can’t agree on the new relief package. Some politicians support the idea that high unemployment benefits may discourage Americans from seeking work, however, as Fed’s M. Daly stated this hypothesis was not proved. Meanwhile, the Fed urges politicians to act. The ongoing stalemate also takes the air out of the USD and supports the euro/dollar.  

Traders remain optimistic about the new coronavirus vaccine especially after the news from Russia. In the US statistics betted though the pace of recovery is far from great while Europe’s efforts to cope with the pandemic seem much more efficient and yield more results. This supports risk-on, which undermines the greenback.

As for the other FX majors, GBPUSD strengthened to the 1.3085 region amid the USD weakness, however worries about the British economy and Brexit may prevent the pair’s further rally. USDJPY lost ground and now prepares to breach the 106.80 level, USDCAD also targets south while AUDUSD sits in the green zone near 0.7165.

Today, the US will publish weekly jobless claims that are expected to drop further. If the report is positive, it may provide the USD some support, however, the overall epidemiologic situation in the US still raises some concerns.


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