Date : 31st December 2020. Market Update – 2020 Day 366 – More grief for the Greenback. USDIndex, Weekly My diary tells me it’s day 366 of 2020. I started my WFH campaign on March 11, when the USDIndex was trading at 96.40 and on its way to 103.80 by March 23. Today, as we close an unprecedented year, the USDIndex has posted another major-trend low, at 89.51, a level last traded in April 2018. The Dollar has continued to correlate inversely with global stock market direction, with weakness today being concomitant with the MSCI Asia Pacific rising to a new record high in holiday-thinned conditions. The USA30 yesterday closed at a fresh record high on Wall Street. Oil and other commodities have, in contrast, remained directionally subdued. EURUSD remained buoyant on dollar weakness, although has so far remained just off from yesterday’s near-33-month peak. USDJPY remained heavy, though above yesterday’s two-week low at 102.96. Cable trades healthily above 1.3600 at 1.3660 in low, low volume trading. Both the Australian and New Zealand Dollars, which are living up to expectations for being outperformers in post-Covid recovery trade, rallied to fresh 32-month highs against the US Dollar. USDCAD edged out a 13-day low at 1.2734. The lack of direction in oil prices over that last 10 days or so has rendered the Canadian Dollar the underperformer of the dollar bloc pack. Oil prices re-entered pre-Covid crisis ranges in recent weeks, while a combination of increasing OPEC and non-OPEC supply swelled global inventories, and demand-sapping Covid lockdowns and restrictions across many major economic areas in the northern hemisphere have taken the legs out of the bull trend. Elsewhere, Bitcoin rallied to yet another record peak north of $29,000. Cryptocurrencies look likely see much more upside amid signs that long-term institutional investment managers have been buying and holding bitcoin and other leading cryptocurrencies as an inflationary hedge. Assets held by Grayscale Investments, the world’s biggest crypto asset manager, is widely cited as a bellwether indicator of this, as it allows professional investors exposure to crypto currencies without having to store the assets. Grayscale reported yesterday that it had $19 bln in crypto assets under management, up from $16.4 bln last week. European stock markets are lower – those that are open – with the UK100 down -1.3%, and the IBEX -0.5%. The 10-year Gilt yield is down -0.8 bp at 0.202%. A very quiet day with many European markets already closed for the extended New Year weekend. Many will be happy to leave a difficult year behind, but as vaccination programs continue it is becoming clear that it will take a while before they really have an impact. For now case numbers in many European countries still look pretty bad and it is likely to stay that way for another week, as caution was relaxed over the holiday period. European stocks are pretty near record highs as the year ends as there are also companies benefiting from stay-home orders and investors look ahead to the expected recovery in 2021. Always trade with strict risk management. Your capital is the single most important aspect of your trading business. Please note that times displayed based on local time zone and are from time of writing this report. Click HERE to access the full HotForex Economic calendar. Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE! Click HERE to READ more Market news. Stuart Cowell Head Market Analyst HotForex Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.