USD

Analysts are preparing for long term weakness in the dollar over the course of 2021 as we await president-elect Joe Biden’s vast stimulus plan. The stimulus would support a broader risk sentiment, which in turn would sap the greenback as investors look outside of safe-havens.

The specifics of this stimulus should become clearer today as we are expecting Biden to detail a plan of “trillions” of dollars for pandemic relief, with the specific figure expected to be around $2 trillion. This figure which was reported by various news outlets is significantly higher than the $1.3 trillion figure that was proposed by Senator Chuck Schumer.

We saw initial dollar strength as treasury yields picked up in immediate response to this news, but longer term we can expect weakness as the bounce is a reaction of bearish positions being altered. This relief needs to be printed and we can expect US debt to further spiral under a Democrat-controlled Congress.

Yesterday also saw the historic second impeachment of Donald Trump, a first in the history of American politics. The big difference from the previous impeachment is the Republican presence alongside Democrats, ten Republicans joined them in the House of Representatives to charge Trump with inciting insurrection in last week’s rioting within the Capitol. The article of impeachment was passed 232-197, however it is unlikely that the impeachment will proceed before Trump leaves office. What could be significant in the future is that a Senate conviction could then lead on to a vote to ban Trump from running for office again.

Key announcements

• USD- 17:30: Fed’s Chair Powell Speech