US dollar, tech stocks drop after Georgia Senate election
The US dollar declined against most developing countries’ currencies after the Democrats candidates flipped the two Georgia Senate seats. Futures tied to the Nasdaq 100 also dropped. The victory means that Chuck Schumer will now be the majority leader, taking over from Mitch McConnell. Also, it means that Joe Biden has a higher chance of accomplishing most of his agenda, including higher taxes, higher wages, and more stimulus to support the economy. He will also likely get his way on regulations and judicial nominations.
The British pound rose today even as traders reflected on the recently announced lockdowns in the UK. Boris Johnson hopes that these measures will help to slow the spread of the virus. While the leading business groups have welcomed the lockdown measures, they have called for more government support for their industries. In a report earlier today, Markit said that the UK services PMI rose to 49.4 from 47.6 in the previous month. Also, the composite PMI rose from 49 to 50.4. The two figures missed the consensus estimates.
The euro rose today even after the disappointing PMI data from the region. In total, the overall services PMI rose from 41.7 to 46.4. This was relatively lower than the estimated increase to 47.3. The composite PMI also increased to 41.9, missing the estimated 49.8. Further data showed that the European Union has an inflation problem as the producer price index (PPI) dropped by 1.9% in November.
The EUR/USD pair rallied to a multi-year high of 1.2340 after the Georgia Senate votes continued to be counted. On the four-hour chart, the price has moved above the short and longer moving averages. Similarly, the Stochastic oscillator has moved to the overbought level. At the same time, the EUR/USD is above the ascending trendline that joins the lowest levels since November. Therefore, the pair will likely continue rising as bulls aim for the next resistance at 1.2350.
The GBP/USD pair rose to an intraday high of 1.3662. On the four-hour chart, the pair managed to move above the 25-day moving average, which is an important support level. Also, it is slightly below the upper side of the ascending red channel. The moving average of oscillator has also moved above the neutral level. Therefore, the pair will possibly continue rising as bulls target the next resistance at 1.3670.
The XAU/USD pair rallied to an intraday high of 1954 after the Georgia election. That’s possible because traders expect additional stimulus to be the first things that Biden implements. On the four-hour chart, the price remains above the short and longer-term moving averages while the RSI and MACD have continued to rise. Therefore, the pair will likely continue rising as bulls aim for the resistance at 2,000.