Dollar Strengthened Ahead Of ECB Meeting

In the Thursday, December 10 session, the EUR/USD traded in a large range of 1.2080-1.2158 remaining very volatile and finished the day with a decrease of 0.26 percent at 1.2079, while the DXY index lost 0.33 percent to 90.79 after breaking above $91.00 level a day before.

On Thursday, global market sentiment weakened marginally in the wake of a pause in the implementation in the new stimulus plan, resulting in a wave of correction across a wide spectrum of risky assets, including currencies. Differences also remain between Republicans and Democrats over the scale of unemployment registrations, state and local government subsidies, and protection from business, school, and non-profit lawsuits that are in a difficult situation due to the pandemic. The US economy still needs additional stimulus, despite the relatively high pace of post-crisis recovery, and the delay in implementing this bill poses risks of slowing down growth in the future.

The rising political tension in the United States is also worth noting. Yesterday, 17 other states entered the Texas Supreme Court case in Georgia, Michigan, Pennsylvania and Wisconsin to reverse the election results. Together these four states have 62 votes, and the decision of the highest judicial authority in the nation will decide the outcome of the presidential election. The reaction of financial markets may be unpredictable, given corporate support for Democratic candidate Joe Biden, if the court grants this argument. However, even though the Supreme Court accepts the election results, it cannot be ruled out that Donald Trump will refuse to recognize defeat, which might lead to a full-scale constitutional crisis in the United States.

In the US, data on wholesale inventories in October increased by 1.1 percent month over month, compared to an increase of 0.9 percent m.o.m. earlier in September, which was higher than the +0.9 percent m.o.m consensus estimate.

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