The euro and pound increased, the dollar fell by 0.1%

On December 23, the euro increased to $1.22, and the greenback declined as foreign exchange traders looked beyond U.S. President Donald Trump’s threat to block an $892 billion coronavirus aid package.

However, foreign exchange markets were little changed, with the greenback falling and currencies deemed riskier, such as the Australian dollar, making substantial gains.

Significantly, in London trading, the U.S. dollar fell by 0.1% versus a basket of other currencies. Besides, this year, the dollar index has declined by more than 6% as investors bet the U.S. Federal Reserve will keep its policy ultra-easy. Additionally, optimism for an additional fall by the dollar are helping buoy stock markets and emerging-market currencies.

Notably, the euro boosted by 0.3% and settled at $1.2192 after reaching $1.22. Significantly, the euro touched more than two and a half years high of $1.2273.

The British pound increased by 0.5% and settled at $1.3441 and was also higher versus the euro amid speculation the E.U. and U.K. will announce a Brexit trade deal on Wednesday. But, a U.K. government minister announced serious disagreement remained between the two sides over competition and fishing.

The sterling has been fluctuating on hopes for a deal before United Kingdom’s Brexit transition period ends on December 31. Most foreign exchange traders believe a deal will be agreed, as so little time left to forge and ratify an agreement.

Barclays Capital’s senior currency strategist believes that the pound will remain volatile.

What about other currencies?

According to senior currency strategist at Barclays Capital in Tokyo, Shinichiro Kadota, the market is waiting for the final results of Brexit talks, and he added that pound would remain volatile.

Additionally, risk-sensitive currency, the Australian dollar increased by 0.7% and touched $0.7576, boosted by signs that a small COVID-19 outbreak in Sydney would be contained.

The U.S. dollar declined by 0.3% against the Japanese yen and settled at 103.35.

The greenback fell by 0.3% against the Chinese yuan in the offshore market to 6.5232 yuan per dollar.