US Dollar Reverses Fortunes In Quiet Session

The greenback was once again the main driver of price action heading into month-, quarter-, year-end. The US dollar initially weakened before some broad-based buying across the board. Thin volumes were evident with many markets including Japan and South Korea closed today, and others truncating their sessions.

• Commodity currencies initially gained on higher agricultural prices and a rebound in oil. Market earlier chewed through AUD/USD offers above 0.7690 taking out the 0.77 handle in the process and touching the highest levels since April 2018. The pair last up 12 pips on the session at 0.7698.
• GBP climbed after the Brexit deal received approval from lawmakers in the UK, clearing another hurdle ahead of the deal becoming law. GBP/USD came off highs as the US dollar strengthened later in the session. GBP/USD last down 7 pips at 1.3617.
• In China December manufacturing PM came in slightly below estimates at 51.9 and down from 52.1 in November, non-manufacturing PMI falls to 55.7 from 56.4. Elsewhere the EU and China announced initial political approval of an agreement to open the Chinese market further to EU investors. USD/CNH is holding lower after another stronger fix for the yuan and briefly foraying below the 6.50 level. The pair last at 6.5017.
• EUR/USD has dropped, last down 10 pips at 1.2288 after being as high as 1.2309. ECB's Wiedmann did cross the wires, saying ECB will raise interest rates if needed, but shift can take some time but these comments have been largely ignored and come a day after ECB's Rehn said the GC were monitoring EUR appreciation.