US Dollar Trades Weak Amid Thin Liquidity

US Dollar Trades Weak Amid Thin Liquidity

Posted Monday, December 28, 2020 by
Arslan Butt • 1 min read

The US dollar is still showing signs of weakness against its major rivals amid thin holiday trading, despite President Donald Trump signing the coronavirus relief package and approving the next round of stimulus measures for the US economy. At the time of writing, the US dollar index DXY is trading around 90.18.

On Sunday night, government officials confirmed that Trump had signed off on the release of $2.3 trillion worth of financial aid to offset some of the damage driven by the coronavirus pandemic. Earlier last week, he had threatened to not sign the bill until lawmakers increased the amount for stimulus checks from $600 to $2,000 per American.

The dollar index continues to weaken after losing value over the past three days, ever since the Brexit deal was signed, lending a boost to the Euro and the Pound. The news of the trade agreement ended worries about a potential no-deal Brexit and helped improve the market sentiment, further denting the safe haven appeal of the US dollar.

Analysts, however, expect the GBP to ease lower against the US dollar after the initial optimism surrounding the Brexit deal fades as the EU and Britain are yet to sort out the issue of access to financial markets. Meanwhile, the greenback is also expected to enjoy some support over worries about the more contagious strains of coronavirus recently discovered in the UK and their potential impact on the global economy.

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