Most major currencies closed the week lower. The largest decline against the US dollar was shown by the Swiss franc (-1.23%). A smaller drop was recorded by the Japanese yen (-1.16%), the Canadian dollar (-0.48%) and the euro (-0.32%). Conversely, the New Zealand dollar (+1.06%), the British pound (+0.37%) and the Australian dollar (+0.09%) showed gains.
The single currency traded higher on Friday, November 13, with EURUSD rising 0.27% to 1.1835 and GBPUSD firming 0.64% to 1.3192. The euro saw lesser gains due to a decline in the EURGBP cross pair.
Market participants brushed aside macro data out of the Eurozone and Germany as well as the rapid pace of new Covid-19 cases. Friday’s gains may also have been driven by upbeat sentiment after Joe Biden's electoral votes climbed from 290 to 306.
The stock market is currently betting on Biden, although it actually makes no difference to the market who is sworn in as president. Stocks would rally under either a Trump or Biden presidency.
News from China may also have put pressure on the dollar. Chinese Foreign Ministry spokesman Wang Wenbin extended congratulations to Democratic candidate Joseph Biden on his victory in the presidential election. Wenbin did not comment on why the Chinese authorities have not yet congratulated Biden on his victory in the US presidential elections and declined to go into detail about Beijing's position on the results.
Today’s macro agenda (GMT+3)
11:40 Australia: RBA Governor Lowe speech
14:00 Germany: Bundesbank monthly report
17:00 ECB President Lagarde speech
16:30 Canada: manufacturing sales (September); US: Empire state manufacturing (November)
The dollar index (DXY) opened lower on Monday morning. The positive external news flow is being driven by expectations that drug maker Moderna will announce positive results for its coronavirus vaccine this week.
At the time of writing, S&P 500 index futures were up 0.8% at 3,610.75. The yen and franc are trading in the red, while the kiwi and Aussie are on top of the leaderboard, implying heightened risk appetite.
Investors continue to shrug off all incoming news about record Covid-19 cases across the globe as well as reports about the tightening of lockdown measures. Vaccination looks set to begin next year but there is no guarantee it will be effective due to mutation of the virus.
The pair halted gains near the upper line of the ascending channel at the 90-degree angle. ECB President Christine Lagarde will deliver a speech at 14:00 GMT. She will speak at the opening plenary of the World Economic Forum’s inaugural Pioneers of Change Summit. Lagarde delivered a number of speeches last week, so a spike in market volatility should haardly be expected.
If bullish sentiment persists throughout the European and North American trading sessions, we think the price action could move up to the 112-degree line at 1.1880. After a four-day dollar winning streak, a moderate decline in the pair to 1.1815 could be in the cards. The 1.1825 level will also act as support, since the balance line will pass through it by 15:00 GMT.