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Transition: President Donald Trump finally authorized his administration to allow a transition to his successor Joe Biden. While Trump continues fighting in courts, the certification of his loss in Michigan and pressure from fellow Republicans pushed him to allow the General Services Administration to work with the President-elect’s team. Markets responded positively to the news and the safe-haven dollar retreated.
US data: Markit’s Purchasing Managers’ Indexes for November beat estimates with 56.7 in the manufacturing sector and 57.7 in the services one. The figures had an outsized impact, boosting the dollar and reversing its losses. House price and the Conference Board’s Consumer Confidence are eyed later in the day.
Gold is licking its wounds at around $1,830 after tumbling down in response to upbeat economic figures. The precious metal is changing hands at the lowest in July.
The German IFO Business Climate figures for November are set to show a decline amid lockdowns. The final read showed Europe’s largest economy growing by 8.5% against 8.2% originally published.
Europe’s coronavirus cases are beginning to decline and governments are making plans for Christmas. Christine Lagarde, President of the European Central Bank, is due to speak later in the day.
GBP/USD is holding onto gains above 1.33 as markets await a breakthrough on Brexit. Officials conveyed a message that an accord is close, yet both sides have yet to agree on the thorny issues of fisheries and governance. Reports of an “interim deal” surfaced on Monday.
NZD/USD jumped after the Reserve Bank of New Zealand considered adding house prices to its mandate. Including rising house prices in calculating inflation would imply tighter monetary policy.
XAU/USD looks to threaten $1800 level amid coronavirus vaccine optimism after the yellow metal resumed last week’s bearish momentum on Monday and fell 2% to the lowest levels in four months at $1831, FXstreet’s Dhwani Mehta reports.
“The bright metal remains exposed to further downside risks, in the wake of the global market optimism amid vaccine progress and Biden transition process. The risk-on rally in the stocks could dash hopes of any recovery in gold, as markets will closely eye the US CB Consumer Confidence data due for release later in the NA session.”
“The path of least resistance for gold remains to the downside, as depicted by the hourly chart. The price has charted a bear pennant breakout on the given timeframe, calling for a test of the measured target at $1800.”
“Since the hourly Relative Strength Index (RSI) trends in the oversold territory, a dead cat bounce cannot be ruled out towards the pattern support now resistance at $1836. The next resistance is seen at the bearish 21-hourly moving average (HMA) at $1842. The long-held support at $1850 could then act as a strong resistance if the bulls extend the recovery momentum.”
The USD/CAD pair traded with a negative bias through the early European session and was last seen flirting with a strong horizontal support, around the 1.3045-40 region.
Following the previous day’s good two-way price swings, the pair met with some fresh supply on Tuesday and was being pressured by a combination of factors. The US dollar struggled to capitalize on its overnight goodish rebound that came following the release of upbeat US PMI prints for November. Apart from this, a positive tone around crude oil prices underpinned the commodity-linked loonie and exerted some pressure on the USD/CAD pair.
From a technical perspective, sustained weakness below the 1.3040 support zone will be seen as a fresh trigger for bearish traders and turn the USD/CAD pair vulnerable to break below the key 1.3000 psychological mark. The downward trajectory could further get extended towards monthly swing lows, around the 1.2930-25 region.
Market participants now look forward to the US economic docket, featuring the releases of the Conference Board’s Consumer Confidence Index and Richmond Manufacturing Index. The data, along with the broader market risk sentiment, might influence the USD price dynamics and assist traders to grab some short-term opportunities.
USD/CHF drops to 0.9120, down 0.08% intraday, during the pre-European session trading on Tuesday. The pair rose to the highest in one week the previous day, before taking a U-turn from 0.9148.
With the normal RSI conditions backing the losses from 50-day SMA, sellers are likely targeting the 0.9100 threshold during further downside.
In a case where the USD/CHF bears dominate past-0.9100, the lows marked in October and the current month’s bottom, respectively around 0.9030 and 0.8980 can return to the charts.
Meanwhile, an upside break beyond the 50-day SMA level of 0.9137 doesn’t guarantee the quote’s run-up as a multi-day-old falling resistance line, currently around 0.9150, challenges the USD/CHF buyers.
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