Dollar snaps four day losing streak

Key Movers

The UK and Europe are set to resume trade talks this week, just days after calling off negotiations due to a lack of progress. The U-turn follows comments from the European Union’s chief Brexit negotiator Michel Barnier who told the European parliament Wednesday morning that a deal was within reach. Barnier also stated that both the UK and EU would need to work constructively and compromise to get a deal done prior to the 31st December deadline. The UK government followed by saying they are ready to welcome the EU team to London to resume negotiations. The news helped the Pound jump higher against both the USD and EUR. GBPUSD started the day below 1.300 but shot to a session high of 1.3170 late afternoon. GBPEUR advanced from 1.0950 to 1.1094.The Australian Dollar crept higher through trade on Wednesday, breaking back above 0.71 US cents amid broad US dollar weakness. Optimism surrounding US fiscal stimulus support has helped the AUD reverse losses suffered in the wake of Tuesday’s dovish RBA minutes while sustained CNY strength has helped underpin the uptick. China has been a bench market for the world as its economy has bounced back strongly despite the initial COVID-19 shock. While the PBOC as tried to intervene and force the currency lower the availability of higher yields and ongoing economic out performance continue to drive gains, marking fresh two-year highs with the USD falling to 6.65 down from 7.16 at the height of the pandemic. Having touched intraday highs at 0.7140 the AUD has drifted marginally lower into this morning’s open. Direction through the rest of the week will be dominated by evolving US stimulus talks. If an agreement can be reached in time to pass a bill before the election the AUD could test the top end of recent ranges, while a breakdown in talks will likely ensure the AUD remains stuck between 0.70 and 0.7230 into November.