Dollar Starts December Under Pressure

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Dollar Starts December Under Pressure

DECEMBER 01, 2020

The U.S. dollar enjoyed a rare respite yesterday, but the relief proved to be short-lived.

Overview

The greenback is under pressure again this morning as risker assets surge amidst vaccine hopes. Global stocks enjoyed a record month in November, and the positive momentum has carried over into today. Pfizer and BioNTech SE sought clearance for their vaccine in Europe, a day after Moderna did the same. Most are expecting approval in the coming weeks, boosting risk appetite.

At 10 a.m., Fed Chairman Jerome Powell will testify in front of the Senate Banking Committee. In prepared remarks released ahead of his appearance, Powell will tip his cap to vaccine progress but maintain that the current surge in Covid cases will be a major challenge to the economy in the coming months. There is a slew of other Fed speakers later in the day.

Markit and HIS will both release their manufacturing PMI data this morning. Both are expected to show a slight decrease in November from October but both readings are expected to stay in expansion territory.

What to Watch Today…

  • Chairman Powell testifies before Congress at 10 a.m.

View this month’s Economic Calendar

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EUR  

The Euro pushed higher overnight and closed in on its highest level since October 26th.  The common currency is flirting with a key psychological level.

The last time the Euro jumped to this level, the European Central Bank was quick to talk down the Euro’s strength.  It appears only time will tell if the ECB will intervene again.  If the Euro were to materially break higher, it would be at its strongest level since May of 2018.

GBP  

The British pound rose to its strongest level in three months overnight, before paring its gains slightly.  The sterling is only half a percent away from trading at its strongest level since December 2019 against its American rival.  The pound has been elevated on more optimism over a potential Brexit deal.

Irish Prime Minister Michael Martin told the Irish Times he is hopeful a deal will be struck by the end of the week. How does the saying go? “Fool me once,”  In other words, we will believe it when we see it.  In the meantime, expect the sterling to continue to enjoy the optimism.

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