A new $ 900 billion monetary stimulus package has been adopted after all the commotion last week. A number of representatives of the US economy are optimistic, but many experts are quite restrained about this initiative. Analysts are worried that the US dollar will further decline, which they warned about last week.
According to the Associated Press, the next package of fiscal assistance includes an additional $300 allocated as part of unemployment benefits, $600 direct payments provided to certain categories of citizens, as well as monetary incentives to support business, education and medical services. Experts emphasize that the White House administration, together with the US Congress, has taken a number of emergency support measures totaling over $ 6 trillion during the entire time of the COVID-19 pandemic. According to them, the new initiative will complement the existing package of bills to finance the work of the US government in the 2021 fiscal year. It should be noted that the size of this package is around $ 1.4 trillion. Today, the US Senate and House of Representatives will vote on this hot issue.
The new stimulus package, adopted by American legislators, provides for the allocation of billions of dollars in aid for food, vaccinations against COVID-19, the purchase of medical supplies, etc. The provision of $25 billion to cover rental costs, as well as $15 billion for national airlines affected by the pandemic, will provide invaluable assistance to American businesses. It should be noted that lawmakers in the United States came to this decision through long and tense negotiations between the Republican and Democratic parties. However, many Congressmen, in particular Democrat Chuck Schumer, emphasize that this bill will not completely cure the US economy. The initiatives taken are clearly not enough to help all Americans affected by the pandemic. According to Schumer, the US economy is in a deep recession.
The current situation may have an unclear effect on the US dollar. Analysts believe that the adoption of the next package of monetary stimulus may weaken the dollar's position, although it strengthened today. Its price has risen against other world currencies during the start of the week. Analysts emphasized that the growing demand for protective assets facilitated this. The catalyst for demand was the news about the spread of a new strain of COVID-19, which appeared in the UK. According to Bloomberg, the information has worsened an already difficult situation. Thus far, Britain has found itself in a kind of political and economic isolation. The country's authorities have imposed strict barrier measures on the movement of residents of London and almost the entire south-east of England, and many European countries have announced the restriction or termination of transport links with Britain.
On December 21, global markets recorded a widespread decline in risk appetite. Investors ignore risky assets, primarily the Euro, preferring more reliable ones such as the US dollar. Analysts say that the current situation contributes to the euro's decline, which fell today by 0.58% (to $ 1.2186) against the dollar. After that, the EUR/USD pair gained impulse, rising to the range of 1.2192-1.2193.
The current decline in risk appetite has been driven not only by the deteriorating situation with the coronavirus in the UK, but also by the difficulties in reaching a Brexit agreement. This issue remained unsolved earlier, so experts fear that London and Brussels will not be able to agree before this year ends. Analysts stressed that the current situation keeps the markets in suspense.
According to experts, the US dollar is showing strength at the start of this week, and this trend is expected to continue in the short term. However, the situation may change in the medium and long-term planning ranges. The US dollar can present many surprises in the upcoming year, but tracking its dynamics, especially after the introduction of new fiscal measures in the United States, will help market participants navigate.
