Dollar recovers from more than two-year low as US stocks slide

NEW YORK (Reuters) – The dollar rebounded from its lowest level in 2-1 / 2 years on Monday as general risk sentiment deteriorated again and Wall Street stocks fell, investors discouraged by weakening US economic data and the lack of any traction on another stimulus package.

Still, the greenback fell 2.3% in November, its biggest monthly percentage loss since July.

In contrast, bitcoin hit an all-time high of $ 19,864.15 on Monday and was up 5.7% to $ 19,235.96.

“We are seeing further easing in US economic data,” said Edward Moya, senior market analyst at OANDA in New York City. “And there has been no sign that we’re going to see Congress come up with a stimulus package anytime soon.”

Data on Monday showed that US-owned home purchase contracts fell for a second straight month in October, with the index of pending home sales, based on contracts signed last month, falling by 1.1% to 128.9.

Other data showed activity at factories in the Midwest and Texas slowing this month, with Chicago’s PMI falling to 58.2 in November from 61.1 in October, as a nationwide resurgence in news COVID-19 infections held back new orders and disrupted production.

On the last day of the month, the dollar index rose 0.2% to 91.89. He’s fallen five of the past seven months.

“This is only a temporary boost for the dollar,” OANDA’s Moya said. “The long-term trend will clearly be a weak dollar.”

Market participants remained optimistic that the administration of US President-elect Joe Biden would pose few obstacles to global growth, including possibly further support for the Federal Reserve’s monetary policy. Both should reduce the dollar’s appeal as a safe haven.

Biden on Monday unveiled his picks for several top economic posts, including former Fed Chairman Janet Yellen as a candidate for Treasury secretary.

“The world is on the cusp of a major inflection point – a vaccine rollout and subsequent economic normalization – which we believe will prove positive for the currencies of exporters, some emerging markets and producers of Cyclical commodities, like oil and base metals, ”UBS Global Wealth Management wrote in a research note Monday.

The euro slipped 0.2% against the dollar to $ 1.1942, after hitting a three-month high of $ 1.20. The European Central Bank signaled earlier this year that it is closely monitoring the euro-dollar exchange rate.

The single European currency posted its best monthly performance since July, gaining 2.6% in November.

The dollar rose 0.2% against the yen to 104.33 yen.

(For the chart on major currencies – monthly performance 🙂

The dollar was flat or slightly higher against the Chinese yuan in the offshore market, at 6.579.

Data on Monday showed manufacturing in China grew at its fastest pace in more than three years in November, as growth in the services sector hit a three-year high.

The offshore yuan saw its longest streak of monthly gains in six years, boosted by China’s economic recovery from the coronavirus and stable capital inflows.