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US Dollar Forex Market Dips on Hopes of New Stimulus Deal

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US Dollar Forex Market Dips on Hopes of New Stimulus Deal
  • Dollar Loses Strength on Fresh Deal Hopes
  • Market Eyes Fed Speakers and Presidential Debate
  • Big Stock Rally Sees Confidence Return

The Dollar lost some strength in the forex market today as hopes lifted that a new fiscal package could be agreed in Washington. This comes as it was announced Monday that the democrats are to unveil a $2.2 trillion dollar aid bill. Also on the mind of traders today is the upcoming presidential debate, the first of the season which is slated to take place later on Tuesday. Meanwhile, stock market futures look quiet at the market takes a breather following a strong rally to start the week.

Coronavirus Aid Bill Brings Renewed Optimism

Republicans and democrats to date have failed to reach agreement on any additional stimulus for the US economy. House speaker Nancy Pelosi announced on Monday though, that the democrats will put forward a new, compromised proposal for agreement. This package is worth a total of $2.2 trillion. Prior talks had broken down in August with both sides unable to agree a deal, though there seems to be renewed hope this time around.

This has brought a sense of confidence to many forex trading the markets, and has led to a push away from the relative safety of the US Dollar again. The US Dollar Index has retracted slightly on the news, though it is still a long way above previous lows from August. The proposed new stimulus package is also set to include another $1,200 payment to each American taxpayer.

Fed Speeches and Presidential Debate Awaited

It will be a busy day for many from the Federal Reserve. There are many scheduled to address congress today and provide an update on the fiscal situation as they see it. This list does not include Federal Reserve Chairman Jerome Powell, though forex brokers and analysts alike, expect the message which is delivered to be similar to last time out. That was that to broadly encourage the government to provide additional stimulus.

The other big speakers of the day will be in debate format as President Trump and Joe Biden take the stage in the first of three televised US Presidential debates scheduled prior to the election. Many will be hoping that a clear winner here can provide more certainty to the economy moving forward. Something that is missing in the current moment.

Markets Look to Pick Up From Strong Recovery

There was a much needed positive day on Wall Street yesterday. Major markets started the week up more than 1.5% each. The Dow S&P 500, and NASDAQ all passing these levels. Traders will be hoping to carry on with that positive momentum when the opening bell comes later this morning.

It remains to be seen if the market will show any reaction to the proposed new stimulus bill, though this evening’s debate is poised to have a bigger impact than usual. Either way, it promises to be an eventful couple of days for trading on the equities front.

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Anthony is a financial journalist and business advisor with several years’ experience writing for some of the most well-known sites in the Forex world. A keen trader turned industry writer, he is currently based in Shanghai with a finger on the pulse of Asia’s biggest markets.

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