The dollar index, which tests its evolution against the basket of six currencies (euro, pound sterling, yen, Swiss franc, Canadian dollar and Swedish krona), has dropped by 0.28% to 90.47 points, in expectation of a new fiscal stimulus plan in the US, while the euro has advanced by 0.12% to $1.2158, returning close to its highest level since April 2018. The yield on the 10-year T-Bond jumped 2 basis points to 0.9230 percent on the US government bond market.
On Brexit, the United Kingdom and the European Union decided to continue negotiations until the last moment on 1 January to try to stop a no-deal Brexit. Sources close to the talks point to advancement, but far from that, nothing is guaranteed yet. On the currency markets, on Tuesday, sterling jumped 0.9% to $1.3444 on expectations of a last-minute agreement.
Moreover, markets closely observed the implementation of a new budget package, as most of the assistance initiatives, including the payment of unemployment benefit to 12 million people and moratoriums on loans and rentals to individuals and companies, were taken at the end of the spring on 31 December.
Things could move rapidly on this topic at last with the thorough presentation of the $908 billion bipartisan initiative on Monday. Authored by a coalition of Democratic and Republican senators, and endorsed by the House of Representatives’ Democratic spokesperson, Nancy Pelosi, the plan was split into two different pieces, giving it more opportunities, at least in part, to pass before Christmas.
The project accounts for a reasonably consensual budget of $748 billion to provide $300 per week in unemployed compensation for four months beginning in January, as well as $300 billion in SME funding and $35 billion in health sector support.
On the other hand, a “package” of $160 billion will include subjects that continue to divide Democrats and Republicans, namely state and community assistance (refused by Republicans), as well as the issue of immunity from Covid-related litigation (demanded by Republicans).