Despite a bounce-back session, dollar maintains at a relative high level, that dollar index is hovering near a seven-week high on Tuesday. This safe-haven is benefited from a euro selloff overnight. One of the reasons is that lockdowns over those European countries are proved to hurt the economy, showing in the Germany retailing figures of Dec.
Overall, the risk appetite from the $900 billion of the coronavirus stimulus bill was overshadowed. In other words, it may be a typical “buy the rumor sell the news” as such “bullish” has been “priced in”. The dollar, which is deemed as the only “relative” safe haven, may go further stronger if the uncertainties remain.
However, what is doubtful to the investors is that the deadline of the negotiations between the UK and EU has been postponed again and again. Both sides decided to continue the negotiation for the Brexit agreement on Sunday, causing a gapping up of the Pound this week. They agreed to put last every effort to reach the deal. So now, the investment market is again optimistic that an agreement of Brexit can be made finally within this week.
Riskier currencies gained on Tuesday as investors are now rebalancing their portfolio after the rebound of the dollar. ZFX analyst Jacob Leung said that, the economic data in the US was just favorable the greenback in a very short term, based on the economic recovery prospective. However, after digesting the news all around, positive sentiment hurts the safe-haven dollar.
For the investment market, traders are a bit positive towards such a big uncertainty, expecting the good side. The UK and the EU emphasized that the negotiations are making progress, but in fact, according to various source, the officials inside the EU are holding a tough attitude towards the negotiations, especially from the two big countries, Germany and France. Those voices were “no agreement may be better than a bad agreement.” So far, the latest news increased the worries as no consensus is made from both sides. German Chancellor Angela Merkel has warned that the EU must prepare for Brexit without a deal.