- Infrastructure Deal Boosts Sentiment
- PCE Data in Focus Later Today
- Markets Continue to Kick On
The forex market felt the impact of the US infrastructure deal approval yesterday. This news dampened down what has been a recovering US Dollar and breathed some life into other major currencies, particularly the Euro. The common currency has pushed its way back toward 1.20 with positive news also in the pipeline on Germany-US trade relations. The major focus of the day will be on the Fed’s preferred inflation gauge as PCE data is released with high expectations. Wall Street has also continued to improve on the back of the positive sentiment from the bill which promises more than $500 billion in infrastructure spending.
Both Sides Reach a Deal on US Infrastructure
President Biden announced yesterday that “We have a deal” on US infrastructure. The agreement will see some $579 billion being spent across a number of areas. These include road, rail, power, and broadband networks all of which have been in need of such a plan for quite some time. The bipartisan nature of the bill should see it garner the support it needs to pass through the Senate in a swift fashion.
For those forex trading, this brought a positive sentiment into the market that has created less demand for the safe-haven Dollar and a timely boost for other major currencies with the Euro in particular benefiting. There were also positive comments from the German economic minister on progress made in trade relations between the US and EU that could see the removal of tariffs on steel and aluminum.
Key Inflation Metric Captures Attention
The Personal Consumption Expenditures report will be released later today. This is used as a key indicator to gauge inflation by the Federal Reserve. The report is expected by analysts to show a year-on-year increase of 3.4% to May.
Forex brokers expect that the release of the data will move the markets based on the outcome. Many remain fearful of inflationary pressures creeping into the current market, while the Fed has also recently set a tone of more caution. Fed Chief Jerome Powell remaining open to the possibility that inflation may become more of a factor than anticipated, and run higher than we had previously expected.
Wall Street Continues Very Strong Progress
Wall Street was full of enthusiasm yesterday as markets continued to rally on news of the bipartisan infrastructure bill agreement. All of the major indices tagged on some more value with the Down Jones continuing a strong week to add another 300 points. The tech-heavy NASDAQ also managed to reach a new record. All the majors are up more than 2% on the week following a dip last week.
The key news to drive the market forward today will be the PCE numbers with a miss to the downside likely to bring a further boost, but anything to the upside being a concerning result.