The greenback erased initial losses made in Asia and European morning and jumped in New York and ended the day higher against majority of its peers on Monday after release of robust U.S. manufacturing and services PMIs.
Reuters reported U.S. business activity expanded at the fastest rate in more than five years in November led by the quickest pickup in manufacturing since September 2014, a survey showed on Monday in an indication the economy keeps making progress at clambering out of the COVID-19 recession even as infections surge. Markit's manufacturing index climbed to 56.7 from 53.4 in October, above the median forecast in a Reuters economists' poll of 53. A reading above 50 indicates expansion.
The services index, meanwhile, rose to 57.7 - the highest since April 2015 - from 56.9 a month earlier. The Reuters poll had pegged the expectation at 55.0.
Versus the Japanese yen, dollar remained under pressure in New Zealand and retreated to 103.72 in Asian morning. The pair then met renewed selling at 103.84 at European open and dropped to session lows at 103.69on usd's weakness. However, price then jumped in New York morning on the release of robust U.S. PMIs and rose to a 6-day high of 104.63 in New York before weakening to 104.28 on profit-taking. Price then rebounded again to 104.58 near the close.
The single currency found renewed buying at 1.1852 in New Zealand and gained to 1.1877 in Asian morning before trading sideways. The pair then jumped in European morning and rose to a 13-day high at 1.1906 on return of risk sentiment. However, price then erased its intra-day gains and tumbled in New York morning on usd's broad-based strength after release of U.S. data to an intra-day low at 1.1800 in New York before staging a strong recovery to 1.1847.
On the data front, Reuters reported euro zone business activity has contracted sharply this month as renewed restrictions to try to quell the spread of the coronavirus forced many firms in the bloc's dominant service industry to close temporarily, a survey showed on Monday. A PMI covering the service industry fell to 41.3 from 46.9, its weakest reading since the height of the first wave of the pandemic and well below the 42.5 predicted in a Reuters poll. With demand drying up despite price cuts and backlogs of work being run down, firms reduced headcount for a ninth month. The services employment index fell to 48.1 from 48.5.
The British pound traded with a firm bias in New Zealand on positive Brexit news over the weekend and gained to 1.3326 in Asia before trading sideways. Price then jumped in European morning on news that Britain's Covid-19 vaccine reported to be 90% effective together with upbeat UK PMIs and rose to a 2-1/2 month peak at 1.3397 at New York open. However, cable erased intra-day gains and tumbled to 1.3265 on usd's broad-based strength before recovering to 1.3331.
Reuters reported British Prime Minister Boris Johnson is expected to speak to European Commission President Ursula von der Leyen this week in a bid to clear the final barriers to a Brexit deal, The Telegraph reported on Sunday. Also, British business activity has contracted in November as a new wave of coronavirus restrictions hammered the huge services industry, but news of possible vaccines have boosted hopes for 2021, a survey showed on Monday. While Telegraph revealed that Johnson is preparing to make an intervention in the Brexit deal talks this week as both sides try to secure a deal before the deadline.
Other parts of the United Kingdom have also imposed restrictions on businesses, including in hospitality and other face-to-face activities. Those closures helped to push the services PMI to 45.8 from 51.4 in October. But manufacturing, which was largely unaffected by the latest lockdown, accelerated with its PMI rising to 55.2, the joint-highest level since 2018.
In other news, Reuters reported the coronavirus crisis will leave lasting scars in the form of higher debt and unemployment, missed education and mental health problems, especially for people on the lowest incomes, Bank of England Chief Economist Andy Haldane said. "The vaccine announcements of the past few weeks offer hope at the end of the tunnel," Haldane said in comments on Monday to a conference for charities organised by Civil Society Media. "Nonetheless, even with a vaccine, it's clear this crisis will lead to some lasting scars, particularly on the poorest and the most disadvantaged."
Data to be released on Tuesday:
Australia imports, exports, trade balance, Germany GDP, Ifo business climate, current conditions, expectations, UK distributive trades, U.S. redbook retail sales, monthly home price, consumer confidence and Richmond manufacturing.
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