On November 30, the U.S. dollar hit its lowest in early London trading in two and a half years. Furthermore, riskier currencies declined slightly as the global equities rally paused the breath.
Global market sentiment increased in November, which caused the dollar to decline and riskier currencies to benefit as investors’ risk appetite was boosted by Joe Biden’s victory, a series of positive coronavirus vaccine developments, and hopes for additional stimulus.
Since July, the U.S. dollar was set for its most massive monthly loss versus a basket of currencies, having wiped 2.5% off its value in November. Additionally, at 0836 GMT, it stood at 91.654.
Furthermore, the New Zealand dollar reached its two-year high overnight and then dropped steadily. Significantly, the New Zealand dollar is on track for its most massive monthly gain since 2013. In early London trading, it was flat on the day at 0.7034 against the greenback.
Besides, at 0850 GMT, the Australian dollar declined by 0.1% and settled at 0.7379
According to Lee Hardman, currency analyst at MUFG, the improving outlook for global growth and strong signals from the Fed that it will keep loose monetary policy well into the economic revival have been supporting a weaker greenback. He added that Asian and commodity-related currency has also benefited from the outperformance of China’s economy, which has been leading the global recovery from coronavirus.
China’s manufacturing increased at its fastest speed in three years
Additionally, during November, China’s manufacturing increased at its fastest speed in three years, while services sector growth reached a three-year high. Besides, the offshore yuan is on course for its longest streak of monthly gains in six years, supported by China’s economic return from the Covid-19 and steady capital inflows. Interestingly, it was broadly flat on the day at 6.5760 against the greenback.
Another essential thing to mention is that the Trump administration is poised to add China’s top chipmaker SMIC and national offshore oil and gas producer CNOOC to a blacklist of alleged Chinese military companies. According to a document and sources, they curb their access to U.S. investors and escalate tensions with Beijing weeks before Biden takes office.
Moreover, the euro increased to a new three months high and settled at $1.19839. Significantly, investors are closely watching for the critical $1,20 level after European Central Bank signaled earlier this year that it was carefully controlling the euro-dollar exchange rate. It has to be mentioned that Brexit negotiations remain the focus for the pound, which was steady versus the euro at 89.83 pence per euro.