How The US Dollar Could Trade This Holiday Week

Last but not least, year-end flows will also affect how currencies trade over the next two weeks. 2020 was marked by broad-based US dollar weakness and equity market gains. The Dollar Index fell to 2.5-year lows this year while the Dow Jones Industrial Average hit record highs. If portfolio managers were to rebalance, they would need to sell US stocks which could drive the dollar lower but rebalancing usually happens on a monthly basis, and in December, there was very little movement in stocks.

The US has the busiest economic calendar this week but even so, there are few market-moving reports. Revisions to Q3 US GDP and existing home sales are due for release Tuesday followed by personal income, personal spending, new home sales, and the final University of Michigan consumer sentiment report. UK GDP revisions will also be released tomorrow with Canadian monthly GDP due on Wednesday.

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