Greenback Unable to Hang On
The US index retraced its recent gains as it closed 0.42% lower yesterday.
Sentiment shifted on the back of consumer confidence falling more than expected in November. This came amid a widespread resurgence in new Covid-19 infections and business restrictions.
Economic relief seems to be on the back burner. This is because there are no expectations of another rescue package until after President-elect Joe Biden is sworn into office on January the 20th.
Euro Eyes 1.19
The euro edged 0.42% higher on Tuesday as it continued to bang on the 1.19 ceiling.
German GDP rose by 8.5% in the third quarter of 2020. And it seems likely that the ECB will be increasing policy stimulus at next month’s meeting.
However, with recent reports of the European bloc dropping back into a severe decline, will the EURUSD be able to maintain the rally?
Sterling Progresses Again
The pound advanced for a seventh trading session out of eight as it closed 0.25% higher.
The market remains confident about a Brexit deal as representatives from the UK and the EU remain in negotiations.
Talks are aimed at bringing positions closer in controversial issues, with less than six weeks to the post-Brexit transition period ends.
Attention turns to Chancellor Sunak’s mini-budget later today, as he stated that his spending review will not lead to further austerity.
Dow Makes History
The main US indices all ended yesterday’s session higher. However, it was the Dow that stood out as it closed at record levels.
All three of the main indices rose by almost 2% amid hopes of a strong economic recovery and the end of political uncertainty.
Among the stock leaders were Apple and Microsoft that advanced 1.2% and 1.8% respectively. Tesla also set all-time highs and took the electric carmaker’s market value above $500bn.
Risk Appetite Shifts as Gold Drifts
Gold plunged 1.7% lower on Tuesday as the yellow metal fell further towards the $1800 handle.
Doubts over a US government transition in Washington faded, as reports emerged that Janet Yellen will become the first female Treasury Secretary.
Yellen is credited with helping steer the economic recovery after the 2008 financial crisis.
WTI at 8-Month Highs
Oil cemented its place firmly above the $45 handle yesterday, as it rose by almost 5%.
Investors are looking past a recent surge in Covid-19 infections to an anticipated recovery in global oil demand. Optimism for the rapid distribution of three coronavirus vaccines early next year also boosted sentiment towards WTI.
The next question would be if oil could reach a new yearly high, as the Biden regime looks to quell the use and production of black gold.