The risk sentiment turned positive earlier this week, on the back of coronavirus vaccine news, sending risk assets down and the USD higher. But, the climb in the USD stopped yesterday, and markets have mostly been trading sideways in the last few sessions. The FED is getting less dovish, while the ECB is getting increasingly dovish, but that’s not helping the buck, as it remains bearish today. However, once the election process is over in the US, the USD should start a long term bullish trend against most currencies, because the US economy is way ahead of other major economies.

Comments by NY Fed president, John Williams

• News on the economy has been much better than expected
• Economic indicators still show that the economy is on a positive trajectory
• Economy may slow somewhat due to recent coronavirus surge
• Sees a lot of downward pressure on inflation
• Inflation will be lower than what we want in the next few years
• Fed decision on rates, policy, will depend on what happens with the economy
• Markets are reacting to the better outlook, not to inflation