The U.S. Dollar is trading all over the place and is currently losing ground this morning after a major jump by counterparts that benefited from news of a second wave of help from the Federal Reserve.
Indeed, a very gloomy futures and equity market already so deep in the red that it reached its limit and trading halted, got major relief as the Fed announced it will buy an unlimited amount of bonds to maintain borrowing costs low and endure credit programs to aid credit for state as well as local governments.
They will be purchasing treasury bonds and mortgage-backed securities. The major aid comes as the weekend frustrated everyone as the government failed to pass a $1.8 trillion stimulus package. The gridlock in Washington is making it difficult for deep recessionary fears to fade away. The buck is still around its highest level overall of all time.
New financing program by the Fed are estimated to get up to $300.0 billion in finance to employers, consumers, and businesses. The reaction this morning was swift, suggesting right away that markets could and should breathe a little easier. Nevertheless, the fiscal must come with the monetary during these times filled with nothing, but doubt and downward revised forecasts. In order for things to dramatically turn around two things must improve: one is perception that governments are willing to use all efforts to combat the situation and second that the very visual threat of the deadliness and chaos of this virus subsides in the public eye. Swings and volatility will be part of it all.
What to Watch Today…
- Senate resumes deliberation on COVID-19 bill at 12:00 Noon
Complete Economic Calendar can be found here.
The Euro is currently rising after falling over the Asian and European sessions. The Fed announcement is a big one in the midst of eagerness over what the government spending bill will look like. Germany on the other hand has already made a commitment to spend, although it is what they least like to do. An emergency package has been put together totaling €150.0 billion to ease the pressures on the German economy. Most nations in lockdown, Italy continues to struggle with the medical toll of the virus as it is now the most affected by COVID-19 and its deadly toll. We hope the curve flattens and the situation gets under control.
The Pound is also improving this morning after the Fed package and a bit of optimism over the generosity expressed by the British government. The Chancellor of the Exchequer, Rishi Sunak, promised the government would cover 80.0% of the salary of inactive workers who have not been laid off. This is in addition to last week’s commitment to state loan guarantees and a revamp of the quantitative easing program. Governments are trying to find solution and perhaps better weather will mean better times coming ahead.