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The end of last night witnessed the beginning of another drama show other than the Brexit. The pair wandering around at 1.2750 all day has jumped to 1.2805 and bounced to 1.2830 due to several surprising news from both sides. The story for the Pound is traceable while the one for the greenback is out of the expectation. Speech from the two Person in charge from BOE and Fed pull the currencies separately. However, USD is hurt more painfully.&nbsp;
Uncertainty remained certainly high as no clear sign to see the Parliament could permit the plan. Why we call it uncertain rather than drawbacks is due to the so-called plan B to make up the absence of a well-prepared plan for the transition. A not-so-ideal deal is better than no deal. A Norway-style relationship with EU is considered if the Proposition from EU is blocked. However, the risk of a plunge no-deal exit is still threatening the UK to devalue the economy by 7.7% in 15 year time than if the UK stays in the EU. Chairman of BoE comments on that the UK is not fully ready for No deal Brexit. The report published by BOE predicted that 8% fall in GDP while the Pound Sterling will depreciate more than a quarter of the current value. If all there come true, selling off would be the trend in the coming year.
After rounds of criticism from Trump, we saw Powell stand still and persist to the hike proposal next year. The plot of the story turned around last night. GDP for Q3 turned out to be tied in with the consensus rate. However, new home sales number turned out to be underperformance. Trade balance expanded to the new monthly record high. Export declined by 0.6% from 141.3 billion dollars to 140.5 billion dollars. Maybe it is not the driven force of the ‘just-below’ comment. Otherwise, collecting all the other information, the Fed concludes the benchmark interest rate is just below the neutral level. The possibility of the rate hike in the coming year is lowered. A better moment for the short interesting dominates the market.
From the technical perspective, the latest pattern constructed a descending channel on the chart, Even though the devaluation of the greenback pulls up the candle to breach the short-term SMA, the upper bound is somewhat firmly resisting the price as the lastest candle is bearish. However, technical readings suggest that an extended bullish trend as the RSI is just above the 50 and the fast line deviates away from the slow line on MACD. The investor would better to start sell-off is price goes below 1.27739 or take profit for 1.28317.

Is it the end of the rate hike and the honeymoon for USD?

Dec 01 2020