Greenback Retreats

Another thin day of volumes and news flow; broad-based greenback sales into the end of the month, quarter and year were a driving force. Focus fell on U.S. fiscal affairs, with optimism re: approval of the U.S. House for increasing stimulus checks tempered by Senate Majority Leader McConnell's objection to a motion to pass the bill unanimously. It now seems unlikely the Senate will have chance to consider the deal before Congress adjourns Sunday. Attention will now turn to Senate elections in Georgia on Jan. 5.

• JPY has inched higher, USD/JPY last down 25 pips at 103.34, though the main driver of the move appears to be greenback weakness.
• AUD/USD up 39 pips at 0.7645. Some strength in the commodity complex has supported AUD & NZD, despite some headwinds. Upside may be tempered by weaker iron ore prices and coronavirus concerns after New South Wales Premier Gladys Berejiklian reported 18 new local cases of covid-19 in a briefing.
• Oil has risen ahead of the OPEC+ meeting on a stockpile drawdown, the dual influences of weaker U.S. dollar and stronger oil saw USD/CAD drop. The pair briefly touched a low of 1.2780 on Tuesday, last trades down 25 pips on the session at 1.2794.
• EUR/USD is having a good session, thin volumes pushing the pair to 1.2295, the highest since April 2018.
• The PBOC fixed dollar/yuan midpoint at 6.5325, around 126 pips stronger for the yuan than yesterday. The bank continues to inject liquidity into the system as we close in on year end. The stronger fix helped accelerate a downside move in USD/CNH, last at session lows of 6.5038.