Equity market backed by the positive vaccine outlook, but USD is continuing its downbeat momentum; AUDUSD facing capped gains due to Australia’s ongoing political tension with China

• Dow Jones Industrial Average pushed US equity indexes higher
• USDJPY faces a key resistance level marked by last year’s low
• AUDUSD gains likely to be further capped by AUD and China’s rising political tensions

U.S. equity indexes failed to show much strength on Monday, but, regardless, Dow Jones Industrial Average still managed to close November with a monthly increase of 11.84%, the highest since 1987.The upbeat momentum is likely influenced by the positive outlook on the COVID vaccines, but logistics, storage, and distribution orders among different regions and population groups all remain challenging issues to solve. Another key constraint is production capacity. By the end of 2021, major pharma companies including Pfizer, Moderna, and AstraZeneca, plan to produce about 4 billion doses of vaccines, still less than 3% of the vaccines needed for the world’s population. Countries will likely or have already entered, either aggressively or, for some under-developed countries, passively, a fierce competition for the vaccine resources.

Outside of equities, November has been an unbelievable month for Bitcoin, which overtook its 2017 peak and may continue higher. Meanwhile, gold has experienced the worst monthly performance since 2016 with a monthly decline of 5.5%. USD has been weakening alongside the gold, and DXY fell about 2% in November. However, investors may see a resistance level on USDJPY at the 2019 low.

China has released its Caixin manufacturing PMI a day after the government announced the official data. Caixin PMI surveys among small and mid-sized export-oriented units. It rose to 54.9 in November, beating the expectation of 53.5 following October’s 53.6. However, this strong rebound news failed to transfer its impact to AUD, a close neighbor by the world’s second largest economy in the APAC region. AUDUSD did not extend the early rise from 0.7338 to 0.7360, and this is likely an outcome of Australia and China’s rising political tension. Further gains may continue to be capped for the short term.