US: Democrats prepare new $2.4 trillion stimulus plan

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Exclusive Capital Research Team

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Market Brief, Friday, 25th of September, 2020

House Democrats are preparing a new, smaller corona virus relief package expected to cost about $2.4 trillion as they try to forge ahead with talks with the Trump administration. While the U.S. has enjoyed several months of strong jobs grow after corona virus-related shutdowns led to widespread layoffs, the national unemployment rate still came in at 8.4% when last measured in August. On Thursday, the Labour Department said initial jobless claims rose slightly to 870 000 last week.

The British pound got a minor lift after the UK finance minister, Rishi Sunak set out his plan to rescue millions of jobs and businesses from a winter crisis amid concerns that resurgence in the coronavirus cases could derail the UK economy. On the other hand, growing market worries about the second wave of coronavirus infections, along with the likelihood of the global economic slowdown continued driving some haven flows towards the US dollar. This comes amid risk of a no-deal Brexit, held bulls from placing any aggressive bets and capped the upside for the major.

The EUR/USD pair seesawed between tepid gains/minor losses and consolidated its recent fall to two-month lows Concerns about the second wave of COVID-19 infections continued weighing on investors' sentiment. This was evident from the risk-off mood through the first half of the trading action on Thursday and drove some haven flows towards the US dollar. This coupled with signs that the economic recovery in the Eurozone could be running out of steam undermined the shared currency and exerted some early pressure on the major. In the absence of any major market-moving economic releases from the eurozone, the pair remains at the mercy of the USD price dynamics and the broader market risk sentiment.

The optimism over US fiscal stimulus and a thaw in the US dollar’s rally helped Gold recover nearly $30 from two-month lows of $1849. Meanwhile, the yellow metal also cheered concerns about the strength of the US economic recovery, in the wake of the stubbornly high Jobless Claims.

And finally, the WTI bulls taking the baton from the bears on Thursday against an otherwise technically bearish backdrop. Demand-side fundamentals demand greatly on a vaccine. Commodities are performing well as the US dollar starts to show signs of exhaustion in its recent bullish correction

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