Greenback Firms After US Stocks Sink

The US dollar firmed by the end of Wednesday’s trading session, trimming losses against some peers and erasing them completely against others. Market analysts pointed at the slump of the US stock market as the likely reason for the recovery of the greenback.
All US stock indices were trading in the red on Wednesday. S&P 500 dropped by almost 1%, while NASDAQ slumped by about 2%. Experts provided a somewhat surprising explanation for the slump of equities — optimism among investors. Usually, risk appetite leads to a rise in stocks. But analysts argued that hopes for fiscal stimulus in the United States encouraged investors to move away from big tech stocks to smaller companies. That led to a drop in all major indices.
The dollar was also rallying on the dovish outlook for tomorrow’s monetary policy announcement from the European Central Bank. But specialists warned that the movement of currencies may reverse after the announcement will happen as the ECB telegraphed its intentions very openly, meaning that a dovish decision has already been priced in.
There will not be particularly important macroeconomic releases in the USA during the rest of this week. The most important reports will be the Consumer Price Index released on Thursday and the Producer Price Index released on Friday. Economists expect that the CPI will show an increase of 0.1% in November after demonstrating no change in October, while the PPI will show an increase of 0.1%, slowing from the previous month’s 0.3% rate of growth. A more important event for traders should the next week’s policy meeting of the Federal Reserve. It can affect the greenback and other currencies strongly.
EUR/USD was down from 1.2102 to 1.2083 as of 21:51 GMT today, retreating from the session high of 1.2147. GBP/USD rose from 1.3354 to 1.3399 but backed off from the daily maximum of 1.3478. NZD/USD opened at 0.7042, rallied to the daily high of 0.7094 but pulled back to 0.7023 later.
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Original from: www.earnforex.com