Dollar Plunges on Soft US Manufacturing Data

USD

The dollar index, which measures the greenback against a basket of major currencies, dropped to a two-week low 97.80 on soft economic data. The ISM Manufacturing PMI fell to 48.1 in November, the lowest reading since January 2016, missing estimates of 49.2. President Donald Trump blamed the Federal Reserve monetary policy stance for the slowdown in the manufacturing sector. The woes over the economic outlook drove US Treasury yields lower.  The 10-year yields declined to 1.817%, raising the chances of an interest rate cut in the fourth quarter of 2020 to 38.2%. The EURUSD edged higher to $1.1090, the GBPUSD advanced to $1.2970, and the USDJPY tumbled to 108.93.

Equities

Major US stock-index futures fell sharply on Monday, weighed down by soft manufacturing data and trade protectionism. The ISM Manufacturing PMI dropped to a three-year low of 48.1 in November, raising investors' concerns over the US economic outlook. On the other hand, President Donald Trump said that he would restore tariffs on metal imports from Brazil and Argentina. Moreover, market participants are afraid that the diverging point of view over Hong Kong between the United States and China could ruin the trade talks' achievements. The US Secretary of Commerce Wilbur Ross indicated that the US would impose further tariffs on China if they couldn't reach a deal.  The Dow Jones Industrial Average futures fell to a one-week low of 27740, the S&P500 futures tumbled to 3114, and NASDAQ futures declined to 8276.

AUD

The Australian dollar surged against rivals following the RBA interest rate decision. The Reserve Bank of Australia left interest rates unchanged at 0.75% as widely expected while confirming optimism over the Australian economic outlook. The committee revealed that the long and variable lags in the transmission of the monetary policy supported their decision. The AUDUSD rose to a three-week high of $0.6852, and the EURAUD plunged to 1.6168.

Metals

Gold prices recovered from losses incurred earlier on Monday as soft US economic data triggered a dollar sell-off.  The ISM Manufacturing PMI missed estimates and lifted investors' concerns over the US economic outlook and the future of interest rates. The price of a gold ounce rose to $1463.60, the price of a silver ounce inched higher to $16.93, and Palladium logged a fresh record high of $1862.

Oil

Oil prices surged slightly on Monday, trimming losses incurred on Friday.  Market participants are looking forward to the OPEC and OPEC+ meetings that are taking place on the 5th and 6th of December in Vienna. Will oil-producing countries agree on cutting output further to offset the effects of weakness in the global manufacturing activity and trade protectionism on oil prices?  The West Texas Intermediate crude futures rose to a high of $56.65, and Brent futures rallied to $62.07

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