Biden rushes to the rescue

Financial and commodity markets analytics

Market Watch review.

In today's release, we’ll cover the following topics:

  • Biden unveils plan to save America. 
  • The head of the US Federal Reserve slowed down the growth of the dollar.  
  • Latest data on claims for unemployment benefits in the United States. 
  • Updated OPEC forecasts for 2021. 

Americans will get more helicopter money: yesterday the US President-elect Joe Biden presented a plan to stimulate the economy and help the population in the total amount of 1.9 trillion dollars.

The aid package, the third since the pandemic began, will help "save the economy and start defeating the virus," Biden said in an address to the nation.

More than half of the amount the new administration has pledged to help American citizens. It will include direct payments of $2,000, which is $1,400 more than the plan had envisioned. 

If congressmen approve the "American Rescue Plan", the amount of dollars in circulation will increase and drag the value of the dollar to the bottom, and gold will be forced to storm new highs.

The publication of details of the $1.9 trillion stimulus plan on Thursday had no effect on quotations. Instead, the dollar was sensitive to statements by the head of the US Federal Reserve.

Jerome Powell on Thursday in an interview with a professor at Princeton University said that America's economy is still very far from life without incentives. 

“We see no reason to change our extremely flexible position until employment really recovers,” the Fed chief said in an interview.
On this news, the dollar changed slightly to 103.77 against the yen, the euro fell 0.1%, continuing its three-day decline.
Over the past week, the number of unemployed people in the United States has sharply increased. According to yesterday's data of the Department of Labor, the number of applications for unemployment benefits increased by 181 thousand people. This is the highest figure since mid-August last year.

As we can see, the epidemiological situation in the United States does not change and this significantly affects the labor market. As the head of the Fed said, it is these figures that make the authorities continue to stimulate the economy and give away free money.

OPEC analysts have published another monthly report on the oil market. Global oil demand will recover by almost 6 million barrels per day in 2021. Oil consumption will increase mainly due to the growth of business activity in China, India and other Asian countries.

Thus, the total demand for oil in 2021 could be 95.9 million barrels per day compared to 90 million barrels in 2020. 

This improvement in the demand forecast by 6.5% corresponds to a smooth increase in oil prices by 5-10% throughout the current year. Brent crude above $65, WTI crude above $60.

Closely monitor the news background and be prepared for all the surprises of the market.