Global currencies in intense race – Market Overview

By: Miguel A. Rodriguez

18:23, 30 November 2020

The end of the month is usually when market movements increase their volatility, and financial assets behave in an uncorrelated way, more due to funding portfolio adjustments.

In general terms, the stock markets show some weakness, motivated mainly by taking profits and closing positions and in the opposite direction to the one that has been working lately, that is, portfolio rotation in favor of value.

The unusual behavior of the stock markets in November is more than relevant, after some controversial North American elections and amid a pandemic crisis, with average rises in the North American indices above 13% and with advances in the peripheral European indices (Greece, Italy, and Spain) above 27%. The latter cases are explained by having been the markets most affected by the pandemic and after the announcement of an upcoming vaccine.

The outflows of safe havens are reflected in assets such as Gold that has broken down technical support levels of importance in the $1800 zone and in the dollar that is weakening in all areas.

EUR/USD has shot higher due to the dollar's weakness and returns to the psychological resistance zone of 1.2000, having reached 1.1990.

 

Above these levels, a daily close makes its way from a technical perspective to the next levels of price concentration between 1.2220 and 1.2440. Undoubtedly, the ECB will pay attention to this single currency movement, which is an obstacle to achieving the objectives of its expansionary monetary policy. The president of the ECB, in her appearance today in the media, has made no mention of this, but at the next meeting, it will be a matter of interest and concern if the euro remains at these levels or higher.

The pound also remains in demand in the market. There is not much information on the development of the Brexit negotiations. Still, the market is inclined in the short term to a favorable outcome that, if it occurs, would push GBP/USD higher above its current resistance levels around the band of 1.3400-1.3500.

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