US Dollar Downtrend Resumes As AUD & NZD Bid In Asia

Central banks and data dominated headline flows. The final FOMC decision of 2020 was ultimately in line with expectations, with new asset purchase guidance but no change to the asset purchase program itself. The decision and optimistic-looking summary of economic projections initially saw the US dollar strengthen before moving back to pre-announcement levels.

• US dollar is seeing some softness in Asia after US Representative Hoyer, a member of the House Democratic leadership, said a fiscal aid deal could be imminent. Though other Congressional leaders have tempered this optimism suggesting negotiations could run into the weekend. All indications remain that both sides are keen to do a deal. President-elect Joe Biden said there would be need for additional measures by February.
• Employment data from Australia was stronger than expected, 90k jobs were added in November against expectations of a gain of 50k, the unemployment rate dropped to 6.8%, while the participation rate also rose to 66.1% from 65.8%.
• AUD/USD has been bid after the release, hitting fresh cycle highs of 0.7592 and rising above 0.7583, the Jun 14, 2018 high. Officials continue to highlight risks over tensions with China, while the budget update forecasted a deficit of AUD 197.7bn in 2020/21
• NZD/USD also moved higher, catching a fresh bid after FinMin Robertson said New Zealand were not concerned with NZD at these levels. Elsewhere Q3 GDP came in above expectations
• USD/JPY has trended lower through the session, mostly on the back of US dollar weakness. Markets await the BoJ rate decision tomorrow, no change is expected.
• GBP/USD has moved higher, gaining around 30 pips on the session, focus continues to fall on Brexit negotiation back and forth. European Commission President Ursula von der Leyen said yesterday that "there is a path to an agreement now", increasing the probability of a deal being reached before the hard deadline of December 31.
• The PBOC fixed USD/CNY at 6.5362, 7 pips higher than the previous fix. USD/CNH continued its move lower, touching 6.50 before rebounding to 6.5112, down 13 pips on the session. The 6.50 barrier was last breached on December 9.