It was a busy week for USD traders as they had to position against another round of positive vaccine news, as well as lots of Fed speak, mixed U.S. economic updates, and geopolitical uncertainty.
Overall, it looks like a worsening pandemic situation in the U.S. and weakness in U.S jobs, retail sales and inflation data may have been the factors bringing the pressure on USD all week.
United States Headlines and Economic data
Monday:
New York Manufacturing Activity Loses Momentum in November — NY Fed – “The Empire State Manufacturing Survey’s general business conditions index fell to 6.3 in November compared with a 10.5 reading the prior month.”
Fed’s Clarida Says FOMC Still Monitoring Asset Purchases – “Earlier Monday, economists at JPMorgan Chase & Co. projected the Fed will decide at its Dec. 15-16 meeting to extend the maturity of its $80 billion monthly purchases of U.S. Treasuries in order to reduce longer-term yields.”
Faster recovery odds have risen with vaccine developments: Fed’s Clarida
Clarida signals possible changes to Fed bond-buying programme – ““While markets are more focused on the medium-term outlook, where vaccine hopes are rising, recent Fed rhetoric has indicated growing concern about the months between now and when a vaccine is widely available”
We saw a spike in volatility for the Greenback during the European trading session. Likely on a quick rise in positive risk sentiment, sparked by another positive COVID-19 vaccine headline (Moderna says preliminary trial data shows its coronavirus vaccine is more than 94% effective). The rally in risk is the reason why we saw USD fall against the comdolls while gaining against the safe havens, but the move seems to have been limited, likely as traders remembered that cases were rapidly rising and mandatory lockdowns were quickly coming from governments across the U.S. (much of California ordered back into lockdown) and Europe (Germany’s Merkel pushes stricter COVID measures).
Tuesday:
Broad fall in the Greenback during the London session, possibly on rising concerns of U.S. shutdowns to combat the acceleration in infections, and/or fears of the U.S. being left behind after Asia forms world’s biggest trade bloc: U.S. Chamber . But the pair was able to recover during the U.S. session against the comdolls as broad risk sentiment seemed become the main driver in FX as it shifted negative.
U.S. manufacturing output picks up in October – “Manufacturing output increased 1.0% last month, the Federal Reserve said on Tuesday.”
U.S. retail sales miss expectations in October – “Retail sales rose 0.3% last month, the smallest gain since the recovery started in May, after increasing 1.6% in September”
U.S. import prices unexpectedly fall in October, falling by 0.1% m/m
U.S. Homebuilder confidence in November shatters record high, as buyers keep fleeing for the suburbs – “Of the index’s three components, current sales conditions rose 6 points to 96. Sales expectations in the next six months increased 1 point to 89 and buyer traffic rose 3 points to 77.”
Fed head Powell: Pace of U.S. improvement slowing, recovery uneven
U.S. business inventories increase further in September
Fed’s Powell signals emergency credit programs should be extended – “He repeated his call for more fiscal support from Congress to bridge the gap for families until a vaccine is broadly deployed. The current rise in infections and hospitalizations is “very much a concern” because it could scare people from engaging in economic activity and slow the economy, Powell said.”
Wednesday:
U.S. housing starts beat expectations in October – “Housing starts rose 4.9% to a seasonally adjusted annual rate of 1.530 million units last month”
Fed’s Barkin: ‘let’s see how it goes’ on whether more QE needed
Fed’s Barkin: ending emergency lending facilities poses risks
FDA authorizes first rapid Covid-19 self-testing kit for at-home diagnosis – “The rapid test utilizes a molecular amplification technology to detect the virus in people with known or suspected Covid-19 and can return results in 30 minutes, the FDA said.”
Thursday:
Philly Fed manufacturing index decreased 6 points to 26.3 in November
U.S. Jobless claims filings pick up amid continued struggles for labor market – First-time filings for unemployment benefits totaled 742,000 last week vs. the Wall Street estimate of 710,000.
U.S. existing home sales rise for fifth straight month – “The National Association of Realtors said on Thursday that existing home sales increased 4.3% to a seasonally adjusted annual rate of 6.85 million units last month. Data for September was revised up to a rate of 6.57 million units from the previously reported 6.54 million units.”
Mnuchin decision cuts Fed lending power, but sources say emergency programs can be revived
Georgia affirms Biden victory, Michigan and Pennsylvania to follow
Friday:
Mnuchin says people are misunderstanding Fed funding decision, there’s plenty of firepower left
Fed’s Kaplan says U.S. economy needs more fiscal support
Pfizer and BioNTech to submit to FDA today for emergency authorization for their coronavirus vaccine – This is the first coronavirus vaccine to seek regulatory clearance in the United States.
