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The U.S. dollar took the crown this week against the other major currencies, likely a reaction to growing fears of another pandemic wave, and possibly on rising expectations of Fed tightening next year as U.S. economic conditions improve.

Notable News & Economic Updates:

Low Volatility & Break from Recent Correlations

Dollar, Gold, S&P 500, 10-yr Treasury Yield, Bitcoin, Oil
Dollar, Gold, S&P 500, 10-yr Treasury Yield, Bitcoin, Oil

Without a fresh, major catalyst, intermarket price action was mostly choppy this week, and volatility in most asset classes continued to dip lower. It was also a step away from recent behavior where bond yields was the leading driver, likely a re-focus by traders back to negative COVID-related developments and headlines.

On Monday and Tuesday, COVID concerns grew in Europe as Germany announced a fresh lockdown, and in the U.S. as case grew across more than half of the country. This was likely the main catalysts that drove bond yields lower, as well gold and oil, while the Dollar and bonds benefited.

We also got comments from Fed Chair Powell on Tuesday, re-iterating that the economy is progressing faster than generally expected, leading another leg lower in bond yields on the session.

We continued to get negative COVID-related headlines through the rest of the week (e.g., BioNTech Vaccines Suspended in Hong KongFrance puts region around Lyon under tighter COVID restrictionsChile locks down Santiago with new cases new pandemic worst), as well as geopolitical headlines (e.g., North Korea launched two ballistic missile testsEU imposes China sanctions over Xinjiang abuses, Massive ship blocking the Suez Canal) that likely contributed to a risk-off lean overall, and likely why the Greenback was able to out perform the other majors by the close on Friday.

U.S. Dollar Wins This Week

As mentioned above, the Greenback was the clear winner as it out performed all of the major currencies heading into the weekend. And with the markets generally leaning risk-off, the Japanese yen wasn’t too far behind.

The “Loser of the Week” title goes out to the New Zealand dollar, taking a huge hit early in the week after headlines popped up on Tuesday that the New Zealand government would take measures to cool the red hot housing market. With that and the broad risk aversion sentiment driving the markets this week, Kiwi bulls didn’t stand a chance of recovering.

USD Pairs

Overlay of USD Pairs: 1-Hour Forex Chart
Overlay of USD Pairs: 1-Hour Forex Chart

GBP Pairs

Overlay of GBP Pairs: 1-Hour Forex Chart
Overlay of GBP Pairs: 1-Hour Forex Chart

EUR Pairs

Overlay of EUR Pairs: 1-Hour Forex Chart
Overlay of EUR Pairs: 1-Hour Forex Chart

CHF Pairs

Overlay of CHF Pairs: 1-Hour Forex Chart
Overlay of CHF Pairs: 1-Hour Forex Chart

CAD Pairs

Overlay of CAD Pairs: 1-Hour Forex Chart
Overlay of CAD Pairs: 1-Hour Forex Chart

NZD Pairs

Overlay of NZD Pairs: 1-Hour Forex Chart
Overlay of NZD Pairs: 1-Hour Forex Chart

AUD Pairs

Overlay of AUD Pairs: 1-Hour Forex Chart
Overlay of AUD Pairs: 1-Hour Forex Chart

JPY Pairs

Overlay of Inverted JPY Pairs: 1-Hour Forex Chart
Overlay of Inverted JPY Pairs: 1-Hour Forex Chart