- USD/CHF recovery hits resistance at 0.9130 and retreats to 0.9110 area
- The dollar pares losses and remains barely changed on the day.
- Speculation about Fed monetary easing in December is weighing on USD longs.
US dollar’s bullish reversal from 0.9105 area witnessed during the early European session on Thursday has been capped at 0.9130 and the pair retreated to 0.9110 area, to show little change on the daily chart.
USD puts an end to a five-day decline
The greenback has appreciated on Thursday, to halt a five-day losing streak with risk appetite vanishing as COVID-19 cases continue increasing. The moderate optimism about the progress on several vaccine projects has been crushed after the US announced that its coronavirus death toll has reached 250.000 and the New York City authorities decided to close schools in an attempt to curb the surge of infections.
The US Dollar Index appreciated about 0.3% on the European trading hours to pull back and turn negative during the US session. The worsening coronavirus pandemic in the US has prompted investors to anticipate further Fed easing at December’s meeting, which is weighing on USD long bets.
On the macroeconomic domain, US Weekly Jobless Claims increased beyond expectations in the week of November 13, posting 742,000 new claims against the market consensus of 707,000. The impact of this event on the US dollar, however, has been muted.
Technical levels to watch
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EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
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