Democrats may cut back on their US financial aid program

The US dollar index on Tuesday updated its minimum. Investors are confident the Fed will maintain a soft monetary policy for a long time and may even introduce a negative rate in the future. The dollar weakened before today’s release of the July Fed meeting’s materials (FOMC Minutes). Most market participants believe the American regulator will set a target inflation rate of 2%. This will allow it to continue its emissions and monetary stimulus more actively, as US inflation was much lower in July, at only 1% annually. The British pound updated its maximum amid the start of another round of Brexit negotiations. Thus, it completely ignored the weak 2Q GDP data released last week.

On Thursday, there was no single trend in the American stock market. The S&P 500 and Nasdaq indices rose and updated historical highs, while the Dow dropped. The US stock market has far outpaced global markets in its recovery from the coronavirus crash. The MSCI global is now about 20% below its all-time high in 2007. Yesterday’s growth was supported by positive data on the US housing market, as well as positive forecasts from Amazon.com (+ 4.1%) and Apple (+ 1%). Their stock prices also hit their historic maximums. Today’s publication of the Fed July meeting materials (FOMC Minutes) can greatly affect the market dynamics. The growth of stock indices is largely driven by the investors’ expectations of $1-3.5 trillion financial assistance to the US economy. A correction is possible if the Fed is against it. In Europe today, the Moeller-Maersk (+4.9%) shipping company reported surprisingly well figures for the Q2. This is another signal that the global economy is recovering from the coronavirus pandemic.

For the second week already, world oil prices are in a narrow range around the highs since early March this year. Today, the next OPEC+ Ministers’ Meeting (JMMC) will be held. No change in oil production is expected. According to the independent American Petroleum Institute, US oil reserves fell by 4.26 million barrels over the week. Official information on stock changes will be released tonight.

The value of precious metals has now fallen slightly, with the US dollar index stabilizing near the new minimum. After the Speaker of the House of Representatives Nancy Pelosi said the Democrats could halve their economic program, there were opinions that the total size of the new US bailout package will be much lower than previously expected, amounting to only about $500 million. This could significantly strengthen the dollar and reduce the demand for precious metals. Copper quotes rose today and updated a 2-year high, which could be another sign of the global economic recovery after the coronavirus pandemic.