Forexlive Americas FX news wrap: Mnuchin and Powell go head to head on Capitol Hill
Forex news for North American trading on December 1, 2020
- Major indices close higher b himut come off highs in the last hour or so of trading
- Fed's Daly: Providing guidance on asset purchases is natural next step
- WTI crude oil futures settle at $44.55
- McConnell: Waiting until next year for covid relief isn't an answer
- Barr: DOJ hasn't uncovered widespread voting fraud
- Gold moves back above its 200 day moving average
- US 30-year bond yields extend gain to 10 basis points
- Which trend is your friend? What's the trade? - BofA
- Brexit negotiations in tunnel? Maybe not
- Fed's Daly: Ready to respond with full range of policy tools
- Biden says proposed virus relief package is "just a start"
- ECB Lagarde: Latest numbers show economy still suffering
- More from Powell: Fed will not preemptively raise rates until we see actual inflation
- European shares rebound after yesterdays declines
- Oil nears August levels as OPEC angst grows
- Mnuchin says he spoke with top Republicans today and they agree on stimulus
- Brexit: Hopes on both sides as the Brexit deal enters the tunnel
- Fed's Powell: In the medium term there is upside risk
- US ISM November manufacturing 57.5 vs 58.0 expected
- US construction spending for October 1.3% vs. 0.8% estimate
- US Markit final Nov manufacturing PMI 56.7 vs 56.7 expected
- New Zealand GDT price index +4.3%
- Canada Nov Markit manufacturing PMI 55.8 vs 55.5 prior
The chairman the Federal Reserve Jerome Powell, and the current Treasury Secretary Stephen Mnuchin were invited to Capitol Hill to discuss the economic outlook in front of the Senate Banking Committee. While Powell painted a more guarded picture based on uncertainty from the Covid, Mnuchin painted a more positive outlook for the economic recovery.
The pair also debated with the help of partisan Senate members, the announcement in November that Mnuchin would end several Fed emergency loan programs. Mnuchin argue that the ending was as per the law. While some Democratic Senators speculated that the Treasury Secretary was trying to sabotage the economy going into the Biden administration.
There is also some chatter about the Dems and Mnuchin getting together to discuss increased Covid stimulation. There was a bipartisan rescue package of $900 billion, that Sen. Mark Warner (D) called "the best effort" to reach a framework for a stimulus deal that both the Democrats and Republicans could agree.
That chatter gave stocks a boost on the 1st day of the last month of the year. Both the S&P index and the NASDAQ index close at new record highs. The NASDAQ index led the way with a 1.28% gain. The Dow industrial average length but still rose by 185 points or 0.63%. However, the Dow industrial average could not stay above the 30,000 level. It peeked at 30,083.31 but is closing at 29,823.92. European shares also advanced smartly with the UK FTSE 100 leading the charge with a gain of around 1.9%.
In the forex, the EURUSD trended to the upside and that propelled the EUR to being the strongest of the majors. The JPY and the USD were the weakest.
For the EURUSD, it closed yesterday near the session lows for the day near 1.1928, but started to rebound from the get-go in the Asian session. Around the London fix time at 11 AM ET, the pair moved above the 1.2000 level, took out the high from yesterday at 1.2002 and then the September 1 high (and 2020 high) at 1.20105. The pair stalled the rally in the last hour of trading at 1.2076. The next upside target is at 1.2088, with close support at 1.2054 and then the 1.2000 level.
There was some speculation that the EU-UK Brexit talks has entered the mythical tunnel Tom Newton Dunn of the Times Radio reporting:
UK-EU trade deal talks have, at long last, entered the mythical tunnel. Michel Barnier has stopped internal debriefs to the wider EU, his last was on Friday. Hopes (on both sides) of a deal by the end of this week - but could still yet all fall apart.
The news also helped the GBPUSD rebound and reverse London morning session declines (after an Asian session rise). The GBPUSD is closing the session at the highest level since September 1 (at 1.34816 - which is the high for the year too). The pair is trading at 1.3422 near the end of day close.
The USDCHF was another big mover. It fell nearly 1% lower and is dipping below the 0.9000 level for the first time since November 18th when the low for 2020 was reached at 0.8978. A break below that level will take the USDCHF to the lowest level going back to January 2015.
In other economic news, the ISM manufacturing index tip to 57.5 from 58.0 expectations and 59.3 last month. Particularly or some was the move in the employment index to 48.4 from 53.2. A reading below 50 indicates contraction in the labor market. The US jobs report will be released on Friday at 8:30 AM ET.
Construction spending came in better than expectations at 1.3% vs. 0.8%. However, the prior month was revised sharply lower to -0.5% from +0.3% originally reported.