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Fiscal stimulus drives market direction

Tuesday 9 February, 2021

Daily Currency Update

USD - United States DollarMarkets have brushed aside any economic indicators, like slow job growth, and only have fiscal stimulus in their sites. The thought that US consumers could receive cash from the government, and that it will increase spending has allowed investors and traders to move their US dollars into other markets and equities. The US fiscal stimulus package isn’t a done deal. With former President Donald Trump’s impeachment trial beginning this week, the administration’s appointment process, and immigration all in the queue, the fiscal stimulus package has been picked and pulled apart. That said, there are enough votes in the House of Representatives and in the Senate to pass the package without Republican support.

Key Movers

After dipping below 1.20 towards the end of last week the euro has regained some of its poise with EUR/USD now back up around the 1.21 handle. Whether this is a temporary correction before more losses are realized is yet to be seen. America’s vaccine program is also way ahead of the EU's so if this continues then it’s likely we could see EURUSD falling back to the 1.20 handle before too long.The pound pushed higher versus the US dollar over the past 24 hours as Sterling benefited from the UK's rapid COVID-19 vaccination program and the threat of negative interest rates being implemented by the Bank of England receded. Latest figures show that over 12 million people have now had at least one COVID-19 jab with the government well on its target to have vaccinated 15 million people by February 15.The Australian dollar edged higher through trade on Monday, extending back through 0.77 US cents as reflationary expectations gather pace. Commodities and equities both advanced Monday, dragging the AUD toward intraday highs at 0.7713, buoyed by expectations for sustained fiscal stimulus roll outs and wide spread immunization programs.

Expected Ranges

  • EUR/USD: 1.203 - 1.211 ▼
  • GBP/USD: 1.373 - 1.379 ▼
  • AUD/USD: 0.769 - 0.773 ▼
  • USD/CAD: 1.271 - 1.276 ▼