The successive developments in the market all turned out to be in favor of the US Dollar.
From the emergence of the new strain of the vaccine to Donald Trump’s threat to disapprove the stimulus bill, such events normally propel the world’s reserve currency up.
However, that is not the case in today’s trading session. The USD index tracks the performance of the greenback against other leading currencies in the basket. It is down by 0.23% so far in the day.
It settled just above the 90-point threshold at 90.338.
With the sudden reversal, analysts note that the market is not fully engaged in an anti-risk stance due to the emergence of other factors.
This includes the report claiming that the approved vaccines may be effective in taking down the mutated virus. As of writing this, there is no confirmation through studies.
In a near-term projection, a currency strategist from Barclays noted that they expect the USD to remain weak as countries are now approaching the holiday break.
The neutral reaction to Trump’s threat to disapprove the stimulus package shows that spectators are still positive that the bill will be approved regardless of the backlash.
Supporting the claim of the still lingering risk-on stance among traders is the hike of the Antipodeans, which are risky assets.
The Aussie managed to hike by 0.43% to 0.7553 despite the rising cases in Sydney’s Northern Beach areas.
The New South Wales state noted that fresh imposition of lockdowns for the new year would be made after Christmas celebrations.
Consequently, the New Zealand dollar is up by 0.21%, where it steadied at 0.7056.
USD JPY Edges Up and Digital Yen in Talks
Japan also managed to hop on the holiday hike as the USD JPY fell by 0.16% to 103.47.
In recent developments, the country’s ruling party called for a greater initiative towards the digital yen. This follows the swift move by its Asian counterpart, China.
The Bank of Japan is likely to start an initial experimentation process in issuing its own CBDC.
Today, the Liberal Democratic Party called out the administration to speed up the process towards the digitization of the yen.
Experts noted that the new mechanisms would make transactions more convenient. They will also contribute to the enhancement of the incumbent settlement systems.
The central bank’s focus for the coming year will involve the private sector towards the transition to ensure a smoother change.