Dec 01, 2020 | Monthly Currency Outlook

Currency Market Outlook - December 2020

Our December report outlines the key events and drivers that our analyst team expect to impact FX currency markets in the weeks ahead.

 Written by George Vessey, UK Currency Strategist 

Highlights include: 

USD: Should labor market and household spending data continue to underwhelm it would cement expectations of markedly slower growth of less than 5% during the October-December quarter.
CAD:While stronger, meaningful moves to the upside for the CAD may have to wait until an effective vaccine edges closer to distribution.
GBP:Expected volatility in sterling has spiked higher largely due to the looming Brexit deadline, but the downside risk likely outweighs the upside risk given the lack of GBP risk premia and positive GBP performance last month. 
EUR:Based on a downgrade of fundamentals caused by the second pandemic wave, European central bankers could increase their support for further easing in December.
JPY:EUR/JPY and GBP/JPY are most at risk of a corrective movement given their relative high valuation and political turbulence in Europe.

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