June 30, 2021 - 04:04 PM 440 views
US President Joe Biden denoted yesterday that a 1.2 trillion dollar bipartisan statement on structure has been reached. Biden's structure deal has been long waited for, as capitalists wish to see the global improvement getting another liquidity boost via this deal. There are, however, some symptoms in the process, mainly related to Biden’s requirement to link the infrastructure deal with social outlaying.
The Bureau of Economic Analysis confirmed yesterday that the big stimulus pushed the US economy to grow at an annualized rate of 6.4% in Q1. The US is the world’s largest economy and what happens in the States has a spill-over impression in the rest of the world. We should see more USD strength soon, as there clearly has been a change in both the empty words from the Fed and in price action in the USD Index.
The dollar has stricken and mobilized higher. This will be a major negative factor for the risky assets. This associates to rising inflation expectations. Yesterday, two Fed bankers, Kaplan and Bollard, said that in the near term inflation could lift more than they have evaluated.
The number of new unemployment calls fell last week while new orders for primary goods manufactured in the US fell in May (0.3%, 0.8% expected, 1.7% previous).
Shortfalls in some products were given as the probable reason for the fall. Such supply-side issues are inflationary, but also likely to descend into the category of passing factors. The US stock markets mobilized somewhat strongly yesterday, with the Dow Jones Industrial Average (+0.95%) resulting in the rally.
The NASDAQ Complex (+0.13%) the S&P 500 (-0.11%) indices also made some healthy increases, with nine out of 11 S&P 500 sectors closing higher.
The Greatest sold off yesterday (GBPUSD, – 0.28%) as the Bank of England decided to keep the monetary policy unvarying. Some inflationary pressures were acknowledged by the MPC members, but they took the view that these pressures were not long-lasting. Most members of the Monetary Policy Commission favored keeping the policy untasted. For intraday traders, the cable is weak as long as it stays below 1.4000.
Inflationary factors making the USD intenser at least in the short to medium term together with the BOE judgment not to touch their adapt monetary policy make a bearish case for the GBPUSD.