London/Sydney (by Marc Jones, Wayne Cole – Reuters) – Federal Reserve Chair Jerome Powell testifies to Congress on Tuesday amid speculation of further policy action at its next meeting in mid-December.
As a result, U.S. 10-year yields are ending the month almost exactly where they started at 0.84%, a solid performance given the exuberance in equities.
The U.S. dollar has not been as lucky. “The idea that a potential Treasury Secretary (Janet) Yellen and Fed chair Powell could work more closely to shape and coordinate super easy monetary policy and massive fiscal stimulus that could drive a rapid post pandemic recovery saw the dollar under pressure,” said Robert Rennie, Head of Financial Market Strategy at Westpac. Against a basket of currencies, the dollar index was pinned at 91.771 having shed 2.4% for the month to lows last seen in mid-2018.
The euro has caught a tailwind from the relative outperformance of European stocks and climbed 2.7% for the month to reach $1.1967. A break of the September peak at $1.2011 would open the way to a 2018 top at $1.2555. The dollar has even declined against the Japanese yen, a safe-haven of its own, losing 0.7% in November to reach 103.89 yen, though it remains well above key support at 103.16.
Sterling stood at $1.3334, having climbed steadily this month to its highest since September, as investors wagered a Brexit deal would be brokered even as the deadline for talks loomed ever larger.
One major casualty of the rush to risk has been gold, which was near a five-month trough at $1,771 an ounce having shed 5.6% in November. Oil, in contrast, has benefited nearly 30% from the prospect of a demand revival should the vaccines allow travel and transport to resume next year. [O/R] Some profit-taking set in early on Monday ahead of an OPEC+ meeting to decide whether the producers’ group will extend large output cuts. Brent crude futures fell 52 cents to $47.66, while U.S. crude eased 60 cents to $44.93 a barrel.
