Coronavirus Aid Package In Focus
Republicans have agreed on the details of their new coronavirus aid package and have started negotiating with democrats.
The key development is the decision to cut the $600 weekly unemployment benefits to just $200 through September. After this, Republicans expect that the states will be ready to process a more sophisticated scheme which will distribute 70% of workers’ previous pay.
Not surprisingly, stimulus checks, school funding and Paycheck Protection Program loans are also included in the package which is worth $1 trillion.
It looks like traders prefer to wait for the ultimate results of negotiations, and S&P 500 futures are losing ground in premarket trading.
All Eyes On U.S. Dollar Ahead Of The Fed Meeting
On Wednesday, the U.S. Federal Reserve will announce its Interest Rate Decision. The rate is expected to stay unchanged, and the market will pay attention to Fed’s comments.
Most observers expect that the Fed will be very dovish, promising to keep rates low for the foreseable future and assuring the market that it has enough firepower in case the economic rebound stumbles.
The Fed’s commentary may have a serious impact on the U.S. dollar which lost plenty of ground in July. The U.S. Dollar Index has currently settled below the 94 level while it started the month near the 97 level.
The downside move of the U.S. dollar has provided additional support to the U.S. stock market since stocks are denominated in dollars. A rebound of the American currency may put some pressure on stocks which currently lack significant upside catalysts and struggle to get to new highs.
Gold Pulls Back After Setting Another Record
Spot gold traded as high as $1981 per ounce before diving below $1930.
The above-mentioned Fed meeting will be very important for gold, silver and other precious metals since this segment is supported by never-ending monetary stimulus and low interest rates.
If the Fed sounds very dovish, precious metals may have more room to run.
At the same time, it’s worth noting that gold had a great run without any pullback so traders may start taking their profits.
For a look at all of today’s economic events, check out our economic calendar.