On Monday, the American currency had witnessed an unprecedented upswing that appeared to have bolted out of the blue amid a staggering spike in pandemic cases as a number of market participants, who had turned their tails over the past couple of weeks following pandemic vaccine development, were found to have jumped on the bandwagon of a US Dollar buying-spree after Government data had shown that US business activity had accelerated at its fastest pace in more than five years this month, leading to a Panglossian rally which analysts said would unlikely to sustain amid a swathe of contentious fundamentals including the painful nine weeks ahead for the departing US President Donald Trump.
In point of fact, Monday’s broad-based rally of the American currency was almost entirely prodded by an upbeat IHS Markit’s survey data on US manufacturing and service sectors’ Purchasing Managers’ Index (PMI), both of which had accelerated at their fastest rate in more than five years in November as beforementioned.
On top of that, a sharp rebound in IHS Markit’s service sectors and manufacturing PMI appeared to have balanced a deluge of downbeat projections for a slowing US economy, though a raft of Wall Street analysts were quoted saying that the gains would likely to be shortlived.
Dollar turns broadly higher after solid gain in Markit PMI data
Citing statistics, on Monday’s FX market wind down, the American Dollar Index (DXY) measured against a basket of six major currencies on an average turned higher to wrap up the day at 92.48 after falling to a session low of 92.01, while the eurozone’s common currency fell 0.10 per cent to $1.1844 against its American counterpart.
The British currency gained 0.29 per cent to $1.3322 after AstraZeneca had reported that its late-stage human trial for pandemic vaccine had shown a 70 per cent efficacy. Nonetheless, the greenback climbed 0.63 per cent against the safe-haven Japanese yen to round off the day at 104.75 yen per US Dollar.
Meanwhile, as many analysts and economists were heavily betting on an underperforming American Dollar throughout 2021 following a likely rebound in global growth over a fair distribution of pandemic vaccines, citing that a break below 92 for the US Dollar Index (DXY) in a near-term would raise an alarming bell for the American currency, a Chief Market Strategist at Miller Tabak said, “In any meaningful way, it’s going to be very bearish for the greenback on a technical basis. ”