Stock markets and oil up again. Today Joe Biden will become the 46th President of the USA
Futures on US stock indices, but also on European stock indices seem to be climbing, and this is accompanied by a rise in the prices of crude oil and gold and silver. Janet Yellen's speech is behind us and we’re waiting for the inauguration of the swearing-in of the 46th President of the United States
The market expects Joe Biden, who will take over power from Donald Trump in the world's most powerful economy, to provide more details on the stimulus plan for the US economy with an initial value of $1.9 trillion in his inaugural speech. References to international policy, relations with China, or domestic policy, including fiscal policy, could also be key.
Yellen: Best time to act big
Joe Biden and Treasury Secretary nominee Janet Yellen are likely to do what they can to ensure that the aforementioned rescue plan for the U.S. economy goes into effect and gains the necessary support.
On Tuesday, Janet Yellen convinced a Senate committee that there is no better time for big action than now. The reason: very low interest rates and low debt costs along with demand for that debt and help from the Federal Reserve. Yellen predicts that interest rates will remain low for several years, making this the right time to increase debt to support the economy. In the context of the currency market and the dollar, the former Federal Reserve Chair added that the U.S. will not seek a weaker exchange rate to gain an advantage over other countries, and if she becomes the U.S. Treasury Secretary already, she will counter any moves by other countries to pursue such a strategy. In other words, whoever, according to the U.S., weakens his own currency in order to gain an advantage, exposes himself to punishment. Thus, if other countries, especially in Asia, stop deliberately weakening their currencies, they will strengthen against the USD, and thus the dollar may weaken.
EC on recommended vaccination rate
In Europe, stock indices are trading in the green. On the one hand, this may be due to Yellen's speech yesterday, as faster growth in the US means higher exports of goods from Europe. On the other hand, it may be due to the fact that concerns about political uncertainty in Italy disappeared after Italian Prime Minister Giuseppe Conte received a vote of confidence to remain in office.
Meanwhile, the European Commission has urged member states to speed up the introduction of vaccination across the EU, saying they should aim to vaccinate at least 80 percent of health workers and citizens over 80 by March this year, and at least 70 percent of their entire population by this summer.
Oil up 1 percent
Oil prices rose Wednesday, with both WTI and Brent varieties up nearly 1 percent to $53.41 per barrel and $56.37 per barrel, respectively. Investors are counting on Joe Biden's proposed stimulus package to boost fuel demand in the US.
Libya's oil production is expected to fall by 200,000 barrels a day as some of its oil fields will be shut down, state-owned National Oil announced. Limiting the increase were concerns about the rise in COVID-19, particularly in Asia. Beijing stepped up action when it reported the biggest daily spike in new infections in three weeks. Meanwhile, the IEA cut its oil demand forecast for 2021 to 96.6 million barrels, down 0.3 million barrels from its earlier estimate.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
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