As of Friday’s close, a basket of major currencies showed mixed dynamics. The kiwi, the aussie and cable closed up 0.20% or more, while the Swiss franc, yen, euro and Canadian were stuck in the red.
The single currency fell from 1.1891 to 1.1850 against the US dollar. No market-driving data came out, so the market reacted to Brexit and Covid-19 news. The pound strengthened on expectations that a Brexit agreement is expected to be clinched this week.
Furthermore, market sentiment was marred by news that US emergency lending program will be allowed to expire at year-end. The Treasury declined to extend five of the Fed’s nine emergency credit facilities. The central bank will have to return to the Treasury $455 bln worth of unused funds, which Congress will allocate for other purposes.
Today’s macro agenda (GMT 3)
17:45 US: Services PMI (November)
18:30 UK: parliamentary hearing on BoE monetary policy reports; speeches by Haldane, Saunders, and Tenreyro
21:00 US: Fed member Daly speech
22:00 US: Fed member Evans speech
All major currencies have been trading in positive territory during today’s Asian trading. The British pound ( 0.27%) currently tops the leaderboard, ousting the kiwi, which had been pushing up currencies across the board earlier this morning on the back of robust Q3 retail sales, up 28% vs. -14.8% earlier and the 20% forecast.
Another positive factor for major currencies is vaccine news. The FDA hopes to authorize the Covid-19 vaccine of drugmaker Pfizer and its German partner BioNTech in mid-December, according to Dr. Monsef Slawi, Chief Scientific Advisor for Operation Warp Speed. In addition, the UK could give regulatory approval to Pfizer-BioNTech’s Covid-19 vaccine this week.
The euro reached 1.1878 earlier against the US dollar. At the time of writing, the euro was quoted at 1.1873, with resistance forming at 1.1891. This level could be retested amid across-the-broad depreciation of the US dollar. Since today is Monday, the pair could retrace to 1.1850 after the morning gains. And even though effective Covid-19 vaccines have been engineered, the exponential spread of the virus amid lockdowns continues to weigh on the euro.
As regards today’s key macro data, we advise investors to watch for Services PMIs in EU members states and the US.