US Dollar Weakens as Commodity Currencies Catch Bid on OPEC

US dollar continued its trend lower during European and US hours as markets assess the prospect of further US fiscal stimulus. Earlier this week, a bipartisan group of senators and representatives proposed a $908bn compromise to encourage Democrat and Republican leaders to allow a vote on fiscal stimulus that could receive support from both parties, the deal must be given authorisation prior to the 11 December deadline to avoid a government shutdown.

• Markets also digested some better than expected data from the US, ISM Services Index fell less than expected and remained in expansionary territory at 55.9, while jobless claims slowed slightly after increasing for two consecutive weeks. Markets look ahead to US NFP data in the US session.
• Commodity currencies saw a bid as crude oil prices rose following the announcement from OPEC+ that they would slow the pace of expansion in oil production. AUD/USD last trades at 0.7441, just shy of the highest levels since 2018. NZD/USD is at 0.7074 after briefly breaking the 0.71 handle. The pair got an extra boost from Fonterra after they increased milk price forecast to NZD 6.70‑ NZD 7.30 per kg.
• EUR/USD rose again, flirting with 1.2180 before pulling back. The pair last trades at 1.2147. There are some headwinds for the euro after its relentless ascent; Poland and Hungary are expected to veto the approval of the European Recovery Fund at the European Council Summit on 10‑11 December which could derail the EU's recovery from the pandemic by aid for struggling economies.
• GBP/USD touched the 1.35 handle before dropping to 1.3455. Irish foreign minister Coveney said there was good chance a Brexit deal could be reached in the next few days, though the pair is subject to whims of incremental and conflicting headlines on the subject.
• JPY has been fairly quiet, strengthening slightly against the G10 basket. Yesterday we heard reports the BoJ is considering an extension to its coronavirus funding program to support businesses as cases continue to increase.