Markets - US investors back in "kids in a candy store” mode
The contents of the latest element of the administration's fiscal plan contained no additional elements from those already widely leaked in the media. Still, the combination of a dovish Fed and more stimulus was enough to push US e-minis into record territory once again as investors are back in "kids in a candy store” mode and feeding off the stimulus sugar rush.
Now that the strategy on both infrastructure and social spending has been revealed – alongside the taxation proposals to fund it – the focus moves quickly to how much of the package can make it through the legislative process. For the USD, the implications of this fiscal plan remain muddied.
The USD has reversed some of yesterday's post-FOMC weakness, but the patient Fed messaging will remain a headwind to the big dollar. In most respects, the FOMC outcome was in line with expectations, which is to say, nothing changed.
The modest US dollar bid may reflect some thought of US exceptionalism amid President Biden's fiscal ambitions and the US GDP release.
The EUR was indifferent to better-than-expected Eurozone confidence data and rising signs of price pressures. USDJPY is back above 109.00 as US yields push higher again as it's been a one-way seller’s street in the US bond market.
Oil prices moved higher through the day on signs of improving demand in key markets such as China, which is moving into its May Golden Week. Analysts expect the country's travel activity by train, planes and automobiles to make a Labour Day record due to pent-up demand.
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