USD Dollar

Asian stocks were subdued on Monday as investors fretted that political instability in the United States was leaving the country rudderless at a time when the global economy was showing signs of faltering. Moves were limited by a holiday in Japan while many bourses are set to close early for Christmas. U.S. President Donald Trump’s budget director and chief of staff on Sunday said the partial U.S. government shutdown could continue into January, when the new Congress convenes and Democrats take over the House of Representatives. Trump on Sunday said he was replacing Defence Secretary Jim Mattis two months early, a move as per officials that was driven by the president’s anger at Mattis’ resignation letter and its rebuke of his foreign policy. Sources also told that Trump has privately discussed the possibility of firing Federal Reserve Chairman Jerome Powell, a move that would likely roil financial markets. Treasury Secretary Steven Mnuchin felt it necessary to personally call the heads of the six largest U.S. banks to calm nerves and made plans to convene a group of officials known as the “Plunge Protection Team”.

In main currencies, regarding EUR/USD, the Fed raised rates and only slightly downgraded its interest rate projections for 2019, two instead of three hikes. Chair Powell also said that the reduction of the balance sheet would continue on auto-pilot, something that hurt stocks. Alongside some optimism, the US Dollar initially saw it as a hawkish hike and advanced while shares fell. Regarding GBP/USD, is trading little changed at around 1.2650 after testing 1.2700 level multiple times over the course of last three days. The UK final reading for the third-quarter GDP confirmed the previous estimate of 0.6% Q/Q increase and 1.5% y/y.

In commodities, Gold held near its recent six-month peak as the dollar eased and the threat of higher U.S. interest rates shortened. Oil prices were near their lowest since the third quarter of 2017, having shed no less than 11 percent last week.

For today as per the economic calendar, there are no high impact news or any other significant news.