On Tuesday, the European currency crossed a significant psychological and technical milestone of crossing the $1.20 level, the highest in over two and a half years marked in May 2018.

The euro jumped 1.2% to $1.2071 in the trading, while the dollar index, which tests its evolution against a basket of six currencies (euro, sterling pound, yen, Swiss franc, Canadian dollar and Swedish krona) dropped 0.74% to 91.19 points, the lowest since April 2018.

In recent weeks, the greenback, which acted as a safe haven during the coronavirus crisis, has been weakened by equity and other market optimism, hoping for a post-Covid economic rebound in 2021 by potential vaccination campaigns.

The dollar has dropped 2.3 percent since the beginning of November, while at the same time, global stock markets have soared 13 percent following the announcement of the effectiveness of multiple coronavirus vaccines, according to the MSCI World Index.

Despite a modest rebound in U.S. interest rates, the U.S. Federal Reserve’s (Fed) massive asset buyback program has also put a glass ceiling on the dollar. On Tuesday, in the expectation of an economic rebound in 2021, the yield on the 10-year T-bond increased 7 basis points to 0.91 percent. However, prior to the coronavirus outbreak, this figure was much higher, about 1.91 percent, a year earlier.

On the macro-economic sector, the Chinese indicators released on Tuesday fuelled optimism about the post-Covid economic recovery, while the deepening of the Euro zone was better than anticipated and its health situation is beginning to improve. In the United States, where cases of coronavirus have been on the rise over the past month, macroeconomic indicators have been showing a half-tone increase, with activity slowing slightly in November in the face of new travel restriction steps taken by some US states.

As a consequence, in November, manufacturing activity slowed in the United States, with an ISM index of 57.5 instead of 58 predicted, and 59.3 in October. The European manufacturing PMI looked better in contrast, at 53.8 in November, relative to a flash estimate of 53.6. It represented an increase in the economy for the fifth consecutive month, albeit marginally down from October (54.8), and also highlighted an expansion rate well above its long-term average in the euro zone.

In October, construction spending remained high in the United States, up 1.3 percent from the previous month, relative to a market consensus of 0.8 percent and after a rise of 0.3 percent in September.

But China’s manufacturing PMI, calculated by Caixin/Markit, was the most common indicator for the markets on Tuesday. Jumping to 54.9 in November created a surprise, up from 53.6 in October, the highest since November 2010.

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