Forex Today: US Dollar extends slide to start the week, eyes on PMI data

Here is what you need to know on Monday, December 5:

US Dollar struggles to find demand to start the week with the US Dollar Index, which lost nearly 1.5% last week, trading at its weakest level since late June below 104.30 in the early European session. S&P Global will release the final November Composite PMI surveys for Germany, the Eurozone, the UK and the US on Monday. Sentix Investors Confidence and Retail Sales data will also be featured in the European economic docket. Finally, market participants will watch the ISM Services PMI from the US closely in the second half of the day.

On Sunday, several cities in China decided to ease coronavirus curbs, helping the risk sentiment improve during Asian trading hours. Urumqi, the capital of the Xinjiang region, said that shopping centres, restaurants and markets will open from Monday.  Zhengzhou residents will not be required to show COVID test results to take public transport, taxis and to visit public areas. Officials also announced that people living in Nanning will not have to provide a negative COVID test to take the subway. Although the data from China revealed that the Caixin Services PMI declined to 46.7 in November from 48.4 in October Asian equity indexes performed well on Monday. The Shanghai Composite gained 1.5% and Hong Kong's Hang Seng rose more than 3%.

Nevertheless, US stock index futures trade virtually unchanged and the 10-year US Treasury bond yield stays in positive territory slightly above 3.5%.

Meanwhile, following its meeting over the weekend, OPEC and its allied producers (OPEC+) have agreed to maintain their current oil-output targets despite a recent decline in energy prices. Crude oil prices showed no immediate reaction to this decision and the barrel of West Texas Intermediate was last seen trading in a narrow channel at around $80.

EUR/USD continued to push higher toward 1.0600 and reached its strongest level in over five months early Monday. Europen Central Bank (ECB) board member François Villeroy de Galhau said on Sunday that he is in favour of a 50 basis point rate hike in December but this comment doesn't seem to be having a significant impact on the Euro's performance against its rivals.

After having closed the fourth straight week in positive territory, GBP/USD preserved its bullish momentum early Monday and climbed above 1.2300 for the first time since late June. Although the pair edged slightly lower in the early European morning, it continues to trade in positive territory above 1.2300.

USD/JPY lost nearly 500 pips last week and started the new week in a calm manner. The data from Japan showed that the Jibun Bank Services PMI came in at 50.3 in November, slightly higher than the flash estimate of 50. USD/JPY largely ignored this data and was last seen moving sideways above 134.50.

AUD/USD gained traction during the Asian trading hours and climbed above 0.6800. Early Tuesday, the Reserve Bank of Australia will announce monetary policy decisions early Tuesday.

Reserve Bank of Australia Preview: Hinting toward an end to its rate hike cycle?

Gold price edged lower on Friday after the upbeat November jobs report from the US but managed to climb above $1,800 early Monday. With the 10-year US T-bond yield holding steady, however, XAU/USD seems to be having a difficult time gathering bullish momentum for now.

Bitcoin gained traction to start the new week and was last seen trading at its highest level in three weeks at around $17,300. Ethereum is up more than 1% on Monday, trading near $1,300.