EUR/USD: Bulls Readying Another Attack On 1.19 As Data Becomes Great Again

Upbeat US data, stronger dollar – this basic logic seemed to disappear and is now making a comeback, triggering a pullback in EUR/USD on Monday. However, the battle continues with politics still playing a role.

The safe-haven dollar is on the back foot once again after President Donald Trump authorized the General Services Administration to facilitate the transition to President-elect Joe Biden. The outgoing Commander-In-Chief made his move after Michigan’s certified his loss and amid growing pressure from fellow Republicans. A smoother transition reduces the already low risk that Trump clings to power and also allows Biden and his team to have better chances of boosting the economy.

Janet Yellen, former Chair of the Federal Reserve, is set to lead these efforts as the new Treasury Secretary. Markets cheered the news of her nomination, also adding to pressure on the greenback. Yellen will likely push for more fiscal stimulus yet without advocating for left-leaning policies. She is a proponent of free trade.

Investors also seem calmer about an upcoming COVID-19 vaccine. AstraZeneca and the University of Oxford reported interim results for their immunization candidate, adding to hopes but also causing confusion. While the average efficacy came out at 70%, a lower dosage regimen pointed to 90% success. The partial figures were criticized. However, now the dust has settled and markets are waiting for fresh figures.

In the meantime, the old continent’s coronavirus cases continue their gradual decline, contrary to the increase in the US, a factor underpinning the common currency.

(Click on image to enlarge)

Source: FT

As mentioned earlier, the only significant factor boosting the greenback was robust data. Markit’s preliminary Purchasing Managers’ Indexes for November beat estimates and pointed to strong growth. As the firm’s PMIs tend to be disregarded by markets, their impact may be pointing to the comeback of statistics as substantial market movers.

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