FX Update: The dollar and most currencies have remained in idling mode

FX Update: The dollar and most currencies have remained in idling mode, as are global asset markets. The DXY dollar index has been seeing narrow ranges just above the week's low at 90.08. EUR-USD, USD-JPY and most other dollar pairings have been seeing a similar directionally uneventful price action. There is one exception out of the main currencies, and that is Cable, which has edged out a fresh 32-month peak at 1.3760. The pair is amid its 10th up week out of the last 13 weeks, which has reflected a combination of dollar weakness and sterling outperformance over this period, though the dominant force today has so far been the UK currency's firming bias. This has seen EUR-GBP print a six-day low at 0.8837, which is less than 10 pips from eight-month low territory. Both GBP-JPY and GBP-CAD, meanwhile, have posted a new respective five-month highs, while GBP-AUD has hit a four-week high. The new highs adds to the incremental gains the pound has been seeing as a consequence of the UK Brexiting with a deal, which has brought an end to uncertainty that persisted for over four years. This, and the UK's ahead-of-the-game Covid vaccination program, which could see UK government start to reverse out of restrictions as soon as mid February, when all of the most-vulnerable groups should have been vaccinated. In asset markets, the picture is a mostly subdued one, with cyclical shares and commodities subdued. Asian share markets were mixed, and the MSCI Asia-Pacific index saw modest declines. Microsoft shares rallied after the tech giant handed in a stellar earnings report, which lifted Nasdaq futures, though S&P 500 and DJIA futures have still declined. The global economy has lost momentum, and the 'reflation trade' that dominated in the last couple of months of 2020 has gone flat in the circumstance of the worse-than-most-anticipated level of Covid related societal restrictions that have been imposed across many countries in winter-bound northern latitudes, and concerns about mutations in the SARS-Cov2 coronavirus, which are juxtaposing historically lofty valuations. A Reuters article highlighted that the S&P 500 was, as of yesterday, trading at 22.7x its expected earnings, near the peak of 23.1x that was clocked last September -- the most inflated level seen since the heady dotcom era that culminated in 2000. Despite the sputtering price action of late, this shows that investors are retaining faith in the reflation trade.