The Dollar is gaining ground to other major currencies during early Monday trading, as the risk-on sentiment that has dominated the markets recently appears to be receding. To a large extent, the greenback’s losses over the last few months are a reflection of investors’ faith in the continuation of the Fed’s dovish monetary policies for the foreseeable future. However, as the markets digest the recent political developments in Washington, with the Democrats now controlling the Presidency, Senate and Congress, the probability of extensive fiscal stimulus being deployed has grown, which in turn increases the likelihood of a change in stance from the Federal Reserve and an anticipated end to the very low interest rates.
