The EUR/USD held steady today ahead of the important runoff election in Georgia even as the relatively weak European manufacturing PMI. The pair is trading at 1.2300, which is slightly below the 2020 high of 1.2310.
Georgia Senate election
The biggest focus among traders this week is about the Georgia Senatorial election that will take place tomorrow. This runoff is important because of its impact on the incoming Joe Biden’s presidency.
If Republicans win one of the two seats, it will mean that Senator Mitch McConnell will be the majority leader. As a result, he will be in a position to bloc most of Joe Biden’s policy changes, including on regulation, higher taxes, judicial nominees, and higher stimulus.
On the other hand, if Democrats win the two seats, Senator Chuck Schumer will become the new majority leader. With the majority, the senate will have an easier time passing Biden’s policies and erasing some of Trump’s priorities.
Disappointing manufacturing PMI
The EUR/USD is rising even after the relatively disappointing manufacturing PMI data from Europe. According to Markit, the Eurozone’s PMI dropped from 55.5 in November to 55.2 in December. This performance was lower than the median estimate of 55.5.
In Germany, the PMI rose from 58.6 to 58.3 while in Italy, it rose from 51.5 to 52.8. Similarly, in France, the PMI increased from 49.6 to 51.9. In a statement, Chris Williamson of Markit said:
“The strong manufacturing growth is thanks to a large extent on booming demand for German goods, which drove most of the increase in eurozone production during December, in turn buoyed by rising exports.”
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