Macro Roundup (Nov 24)

SHANGHAI, Nov 24 (SMM) — This is a roundup of global macroeconomic news last night and what is expected today.

The dollar bounced off an almost three-month low against a basket of currencies hit on Monday following optimism over another COVID-19 vaccine as the index approached a technical support level that if broken, could signal further weakness for the greenback.

The dollar had weakened as risk appetite got a boost after AstraZeneca said that its vaccine could be about 90% effective and it would prepare to submit data to authorities around the world that have a framework for conditional or early approval.

“At least for now the news from AstroZeneca is helping to overshadow concerns about the economic fallout from mounting business restrictions,” said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.

However, “the lingering downside threat to growth may help slow the dollar's decline”, Manimbo said.

Investors are balancing the prospect of a closer rollout of COVID-19 vaccines against worsening U.S. economic data as a rise in COVID-19 cases again leads to business shutdowns.

On Wall Street, stock futures rose in overnight trading on Monday following a strong session on Wall Street boosted by positive vaccine news.

Futures on the Dow Jones Industrial Average gained 160 points. S&P 500 futures rose 0.4% and Nasdaq 100 futures climbed 0.3%.

The move higher in futures came after General Services Administration chief Emily Murphy told President-elect Joe Biden that the Trump administration is making federal resources available for his transition into office.

Trump tweeted that he approved of the move, but said he will “keep up the good fight” even as his reelection campaign has so far failed to win any legal victories that would invalidate votes for Biden.

Stocks kicked off the Thanksgiving week on a high note on Monday as investors piled into reopening trades amid vaccine optimism. The Dow rose more than 300 points for its best day in a week, while the S&P 500 climbed 0.6%. The tech-heavy Nasdaq Composite underperformed with just a 0.2% gain.

Oil prices rose more than 1% on Monday, extending last week's gains as traders eyed a recovery in demand due to successful coronavirus vaccine trials.

Sentiment was also bolstered by expectations that the Organization of the Petroleum Exporting Countries (OPEC), Russia and other producers, a group known as OPEC+, might extend a deal to restrain output.

Brent crude rose 92 cents, or 2%, to $45.89 a barrel, while West Texas Intermediate crude settled 64 cents, or 1.51%, higher at $43.06 per barrel. Both benchmarks jumped 5% last week.

The contango structure in the market, where the prices of front-month delivery contracts are lower than those for delivery six months later, narrowed to 32 U.S. cents, its smallest since mid June, indicating that concerns about a glut were receding.

Outlook for demand has improved with news indicating progress towards developing COVID-19 vaccines. A U.S. official said first inoculations in the United States could start a day or two after regulatory approval was secured.

British drugmaker AstraZeneca said on Monday its vaccine, developed along with the University of Oxford, could be around 90% effective under one dosing regimen.

Gold fell nearly 2% to its lowest in four-months on Monday as better-than-expected U.S. business activity data and optimism over progress in COVID-19 vaccines boosted hopes for a swifter economic rebound and drove investors towards riskier assets.

Spot gold dipped 1.7% to $1,838.61 per ounce, after falling to its lowest since July 21 at $1,834.95. U.S. gold futures shed 2% to $1,835.50.

Stocks jumped after data showed U.S. business activity in November expanded at its fastest rate in more than five years, pointing to a recovery from the pandemic’s economic damage.

“Gold broke below the key $1,850 level after an unbelievably strong U.S. PMI release just dampened the need for stimulus. No one was expecting such strong readings in both services and manufacturing,” said Edward Moya, senior market analyst at OANDA.

IHS Markit's flash purchasing manager's index (PMI) index for the euro zone, which looks at activity in both manufacturing and services sectors, came in at 45.1 in November — the lowest reading in six months.

Key economic data slated for release today include Germany GDP Growth Rate for Q3 (Not Seasonally Adjusted), Germany IFO Business Climate Index for November and monthly rate of US FHFA House Price Index in September.