For the third straight day, the US dollar gained strength relative to its peers, and the US Dollar Index hit a 4-week peak. Forex strategists say that, in general, risk aversion is the reason for the sentiment shift, and note that both the pound and the Australian dollar have lost ground as a result. Market players are anxious to see what, if anything, will happen in the days ahead of the US presidential inauguration which will take place on Wednesday. The incoming Secretary of the Treasury, Janet Yellen, previously the head of the Federal Reserve, is likely to provide some comfort to Forex markets with affirmation of her stance that the Biden administration will not be looking to weaken the greenback.
In London trading as of 11:48 am, the GBP/USD was trading at $1.3551, a loss of 0.2517% and off the session peak of $1.36131. The EUR/USD is also lower at $1.2074, down 0.0406%; the pair has ranged from a low of $1.20559 to a peak of $1.20921. The AUD/USD was down at $0.7673, a loss of 0.3584%, off the session high of $0.77148.
Markets Look Ahead to EU Data
With US financial markets closed today and European markets quiet with no market-moving events, Forex players will look to tomorrow's data from the Eurozone. The EU's Statistical office will release inflation data for Germany; analysts are predicting that the December numbers for the Harmonized Index of Consumer Prices will be flat at -0.7% on a month-on-month basis. The EU ZEW surveys are also due out tomorrow, and analysts are calling for a slight improvement in economic sentiment. Analysts are predicting that the German ZEW survey of economic sentiment will edge higher to 60, up from 55; the predictions for the EU survey of economic sentiment are not as optimistic, with analysts expecting to see a decline to 45.4 from 54.4.