ForexTime - Analytics

ForexTime

795.25 5.75/10
76% of positive reviews
Real

Trump delivers a late Christmas gift

Trump delivers a late Christmas gift

Asian equities, along with US futures kicked off the final trading week of 2020 on a bullish note. Although he described the $900 billion pandemic aid as a “disgrace” last week, President Trump signed it into law on Sunday along with the $1.4 trillion spending bill.

Passing the two packages means a partial government shutdown is avoided and millions of unemployed Americans will receive direct payments and other forms of assistance after two federal unemployment programs expired on Saturday.

We can finally breathe a big sigh of relief and say that chaos over the stimulus bill is over. A selloff has been averted and this could provide one last boost to risk assets in the last four trading days of the year. However, investors shouldn’t get over-excited as most of it is probably already priced in.

The launch of mass vaccinations throughout Europe yesterday is also bringing some hope that we are one step closer towards the end of the pandemic. Currency markets are reflecting the upbeat mood with the safe haven dollar declining against most major peers. The Euro, the best performing major currency in 2020 having gained 9% year-to-date, is up 0.2% in early trade. The second-best performing currency, the Australian dollar is also up by 0.2%, trading near a two and half year high. Meanwhile, Sterling has failed to break above 1.36 following last week’s trade agreement as there is still no decision on how much access Britain’s financial services firms will get in the EU. Expect currencies to trade in narrow ranges as many traders are in holiday mode.

Gold is another asset that initially rose sharply after the signing of the pandemic aid bill but has given up most of its gains in late Asia trade. A weaker dollar should provide further support to the precious metal, so for prices to hold above $1,900 we will need the greenback to continue weakening from here. Hedging against inflation risk has been the number one factor contributing to gold’s strength and we probably won’t see this until the second half of 2021. However, any signs of building price pressures could send up gold back above $2,000 in the medium term.

Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.


To leave a comment you must or Join us


By visiting our website and services, you agree to the conditions of use of cookies. Learn more
I agree