The US dollar index keeps rounding above the 103.60 historical support level. The buyers have already defended this level for three weeks, highlighting their interest in the greenback. Thus, buying USD looks less risky right now.
$2trln stimulus from President Trump
Bread to the public
The deal that was struck by Donald Trump’s administration with the Senate amounts more than $2trln of tax exemptions and financial aid. Out of that, $350bln goes to small businesses, $500bln goes to back loans, and checks of $1,200 to almost every individual in the US. It is supposed to receive a confirmation vote on Wednesday and go to the President’s table for his signature to go into action.
Just to compare, the 2008 crisis prompted Barack Obama’s administration to unfold an $800-million stimulus to lift economic activity. The fact that the current financial aid is 1.5 times bigger than this may mean several things. On the one hand, the virus-hit US economy may be perceived as (but not necessarily be) in a graver condition currently than it was in 2008. On the other hand, having the homework done (hopefully) after the last crisis, the Senate and President Trump’s administration may just be willing to go full-on against the virus in an effort to make the shortest possible crisis and recovery time.
The market, generally, took this measure as a small sign of hope and strength. The risk-on mood got partially back, with the JPY giving room to the USD…
…and gold dropping its steam after its short rally when it started behaving like a normal safe-haven commodity – like gold, in other words.
S&P 500 has been consistently rising since Monday and currently is testing the resistance of the 50-period Moving Average at the level of 2455. Tactically, that’s a meaningful recovery as it is the first time since the beginning of March that the stock market index grows high enough to challenge the descending order of the three MAs. Needless to say, keep going.
On the H4 timeframe, the US dollar index has formed a bullish falling wedge. At the beginning of the trading session, the price is testing the upper border of this wedge. Thus, in case of a higher-than-expected Core PCE Price Index m/m, the US dollar will skyrocket against other currencies.
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This week may be the most important since the year started as the Fed assess the economic outlook and the US presents fresh NFP readings.
S&P Global, a private banking company, will release a monthly change in British Flash Manufacturing Purchasing Managers Index (PMI) on January 24, 11:30 GMT+2. The index is a leading indicator of economic health as businesses react quickly to market conditions, and purchasing managers hold the most current and relevant insight into the company's view of the economy.
The United States Bureau of Labor Statistics will publish the US Consumer Price Index (CPI) m/m on January 12 at 15:30 GMT+2. The index measures a change in the price of goods and services purchased by consumers.