Daily Market Update

Buck Quiet as Stimulus Gets Figured Out

January 26, 2021

The U.S. Dollar is trading in tight ranges this morning as global markets have been mixed with news that the U.S. stimulus package that is so eagerly awaited could come as late as mid-March to have funds available and is likely to be smaller than the planned $1.9 trillion cost. 

Overview

The political back-and-forth is taking over the feeling across markets that this development in fiscal help could spark an acceleration of the economic recovery from the pandemic.

Instead, we are now waiting to see if the Senate does make a deal in power-sharing, in order to legislate without a filibuster, and if that causes a compromise in which the bill does less than markets have been pricing-in. At this point, COVID-19 is evidenced to have brought with it an exacerbation of poverty levels in the U.S., and rosier outlooks for 2021 progress are starting to already be revised downward.

We shall see Consumer Confidence and the Richmond Manufacturing Index for January at 10 AM. U.S. futures are looking negative at the moment although some large banks have shown good earnings such as UBS while tech companies are also slated to show some good profits, especially Microsoft which will reveal its numbers at the end of the day. Other than monitoring headlines on spending, we may see more volatility and action tomorrow as the Fed speaks and giants like Facebook show if forecasts for tech earnings meet expectations.  


What to Watch Today…

  • No major events scheduled for today

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EUR 

The Euro is not moving much at the time of writing but could experience some headwinds as traders react to the resignation of Prime Minister Giuseppe Conte in Italy after votes of confidence revealed a tough path to form a new alliance to govern. President Sergio Mattarella will be tasked with trying to bring in a new leader who can create some consensus.

COVID-19 keeps doing damage while vaccine rollouts are running into delays, further worrying economists that the timeline for getting over the pandemic hump will be longer than desired. Meanwhile, stocks went up as companies showed they managed to eek out profits in Q4. We shall see how this all develops, but political stability in the midst of the pandemic is threatening the shared currency’s value.

 

GBP 

The Pound is also in familiar ranges, but it is struggling to find direction based on good November employment data and poor January Retail Sales. Average Weekly Earnings rose by 3.6% over the 2.9% predicted while the number of jobs lost was not as high as expected. Retail Sales on the other hand showed a deeper contraction than expected and with Brexit trading manifesting problems, indicators could really dwindle big as we get into the meat of Q1.

 

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