Forex Today: Dollar licks its wounds as Biden cools on China, vaccine, stimulus and data eyed
|Here is what you need to know on Wednesday, December 2:
The US dollar is marginally bouncing as President-elect Joe Biden wants to keep tariffs on China unchanged at first. The UK's approval of a coronavirus vaccine helps sustain an upbeat mood. ADP's jobs figures, Fed Chair Powell's testimony, fiscal stimulus, and Brexit are all eyed.
Vaccine: The UK is the first Western country to approve a COVID-19 vaccine, giving the green light to the Pfizer/BioNTech jab, which could be administered as early as next week. The news boosts the market mood.
Sino-American relations: President-elect Joe Biden told the New York Times that he will first conduct a full review and consult allies before removing any tariffs on China. These headlines somewhat weighed on the market mood and allowed the dollar to stabilize.
Fiscal stimulus: A bipartisan group of US Senators unveiled a package worth $908 billion. It is unclear if outgoing President Donald Trump and other politicians back the accord.
Monetary stimulus: Jerome Powell, Chairman of the Federal Reserve, refrained from hinting about expanding the bank's bond-buying scheme in its upcoming decision, but only committed to providing support. He continues testifying on Wednesday.
EUR/USD rallied on Tuesday, hitting the highest since May 2018. The mix of political certainty, a divergence in reactions to monetary stimulus, and vaccine hopes triggered the breakout.
See EUR/USD Forecast: Three reasons for the massive breakout and big levels to watch
The US ISM Manufacturing Purchasing Managers' Index marginally missed expectations with 57.5 points while the employment component dropped below 50, indicating contraction. The ADP jobs report is due out on Wednesday and provides another clue toward Friday's Nonfarm Payrolls.
See ADP Jobs Preview: Even a minimal beat could trigger a greenback comeback
Brexit talks continue in full force but the EU denies they have "entered a tunnel" – a term that refers to off-the-radar intense talks are en route to an accord. GBP/USD jumped above 1.34 in hopes for a breakthrough and is holding above that level.
AUD/USD is trading closer to 0.74 amid US dollar weakness and upbeat Gross Domestic Product figures from Australia. The economy grew by 3.3% in the third quarter, better than expected.
Gold has recaptured the $1,800 on Tuesday amid stimulus hopes.
Oil prices continue spilling lower as OPEC+ ministers have yet to reach a deal on output cuts. WTI is changing hands at around $44.
The Canadian dollar is lagging behind some of its peers due to the slide in oil prices and disappointing Canadian GDP, which came out at 40.7% annualized growth in the third quarter.
Cryptocurrencies remain highly volatile. Bitcoin is trading below $19,000 after nearing the round $20,000 level on Tuesday.
More US Manufacturing Slows in November: New business remains strong
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