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Investors cash out of dollar with relief package

USD - United States Dollar

President Joe Biden’s COVID-19 relief package sent investors cashing out of US dollars and into the stock market this morning. The US Dollar Index, which measures the value of USD against a basket of major currencies, was down a quarter percent this morning.

The administration began its political campaign yesterday to secure Senate support for the proposed $1.9 trillion relief package. One of the first hurdles was securing a power-sharing deal between Senate Majority Leader Charles Schumer and Senate Minority Leader Mitch McConnel. Of course, that small compromise was based on McConnell’s willingness to ditch the filibuster from Senate rule, and long-time senators from either party won’t support the change. So, the first step to negotiating the relief package may just be politics as usual. As it is, this compromise drove equity markets higher and the dollar weaker.

Key Movers

The International Monetary Fund said on Tuesday that the world economy will grow 5.5% in 2021 as COVID-19 vaccines are distributed globally. The IMF, in its World Economic Outlook update, said that it expected the US economy to grow 5.1%. The countries that share the euro could expect growth of 4.2%. China could expect a record 8.1% growth. The IMF also expects global trade to rebound this year, recording 8.1% growth after falling 9.6% last year.

Expected Ranges

EUR/USD: 1.211 - 1.217 ▼

GBP/USD: 1.361 - 1.374 ▼

AUD/USD: 0.767 - 0.775 ▼

USD/CAD: 1.269 - 1.278 ▼