Forex Today: New month, fresh market gains, PMIs, Powell's testimony and Brexit eyed

Yohay Elam FXStreet

Here is what you need to know on Tuesday, December 1

Markets have resumed their gains and the dollar is on the back foot once again as the dust settles from end-of-month flows. Optimism about vaccines and Brexit counter concerns from Powell and Yellen about the US economy.

New month: November ended with a drop in stocks, correcting only a fraction of the considerable gains recorded during the month. The US dollar bounced back on Monday. After the dust settled, the greenback is on the back foot, equities are upbeat and also gold is edging higher toward $1,800.

GBP/USD has resumed its gains within the range amid upbeat comments about Brexit talks. Negotiators continue talks in London and strive to reach a deal this week. Fisheries and a level-playing field remain the thorny issues.

EUR/USD is trading above 1.1950 after touching the 1.20 level on Monday. The preliminary November Consumer Price Index figures for the eurozone are set to show subdued inflation after German statistics fell short of estimates. Christine Lagarde, President of the European Central Bank, will speak again on Tuesday and will probably reiterate her commitment to adding stimulus later this month.

Vaccine: Moderna completed its COVID-19 immunization Phase 3 trial, confirming around 94% efficacy. The firm announced it submitted an application for emergency usage and a hearing is due on December 17. The Pfizer/BioNTech vaccine may be approved in the UK in the next few days and in the US next week. Another effort from Novavax is also gaining traction. The news underpins gains.

Jerome Powell, Chairman of the Federal Reserve expressed concern about the current spread of the virus in prepared comments ahead of Tuesday's testimony. While he committed to supporting the economy, Powell did not hint if additional bond-buying will be announced later this month. \

See Powell's CARES Testimony Preview: A little optimism might help

Janet Yellen, Powell's predecessor at the Fed, was officially nominated as President-elect Joe Biden's Treasury Secretary. In an initial reaction, she echoed worries about the suffering in the months ahead but vowed to keep the American Dream alive. The most recent figures show yet another record in coronavirus hospitalizations, above 96,000.

AUD/USD has resumed its gains amid US dollar weakness and on the background of the Reserve Bank of Australia's rate decision. The RBA left interest rates unchanged at 0.1% as expected.

The US ISM Manufacturing Purchasing Managers' Index is set to edge down from the highs but remains on solid ground. The forward-looking indicator serves as a hint toward Friday's Nonfarm Payrolls report.

See US ISM Manufacturing PMI Preview: With a tablespoon of salt

The Chinese Caixin Manufacturing PMI and a parallel figure from Japan both beat estimates, adding to the upbeat mood. Final industrial sector surveys are due out for the eurozone and the UK.

WTI Crude Oil is battling the $45 level after OPEC+ members failed to reach an agreement on extending production cuts and are set to extend talks in the next few days.

USD/CAD is battling the 1.30 level amid the moves in petrol prices and ahead of Canada's Gross Domestic Product release. Third-quarter GDP is set to leap by 47.6% annualized after collapsing by 38.% beforehand.

Bitcoin is consolidating its gains above $19,000 after flirting with all-time highs on Monday, hitting records on some exchanges but not on others. Ethereum and XRP remain at the top of their recent trading ranges.

More Markets return to normal, and traders may be loving it

Author

Yohay Elam

FXStreet

Yohay is in Forex since 2008 when he founded Forex Crunch, a blog crafted in his free time that turned into a fully-fledged currency website later sold to Finixio.

GBP/USD extends the drop to 1.3360

GBP/USD builds on Monday’s decline and briefly clinches five-day lows near 1.3360 on Tuesday. Cable’s extra pullback follows the better tone in the Greenback as uncertainty in the Middle East prompts investors to adopt a cautious stance. Meanwhile, an apathetic UK labour market report also collaborates with the selling pressure on the British Pound.

EUR/USD stays offered just above 1.1400

EUR/USD keeps the downtrend well in place for yet another day, challenging the 1.1400 contention zone on Tuesday. The continuation of the selling impulse in spot comes amid decent gains in the US Dollar, which continues to find support in the persistent effervescence surrounding the US-Iran crisis.

Middle East crisis intensifies, Gold up

Gold now seems to have embarked on a consolidative phase below the key $4,100 mark per troy ounce in the latter part of Tuesday’s session. Meanwhile, uncertainty surrounding the Middle East conflict and rising expectations for a hawkish Fed policy outlook are expected to limit the precious metal’s bullish momentum in the near term.

XRP rebounds on rising on-chain activity

Ripple (XRP) ticks up and trades around $1.13 at the time of writing on Tuesday. This rebound aligns with a broader recovery in the cryptocurrency market, attributed to reports that mediators between the United States (US) and Iran are seeking a 10-day cessation of strikes to find a way back to the signed Memorandum of Understanding (MoU).

The Iranian war has again risen

The Iranian war has again risen to the top of the economics factor list. There is no end in sight. Intelligence experts say the current level of offense/retaliation will not change minds in Tehran, while in Washington, Trump fears all-out war, which would mean boots on the ground.

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