The 'Stimulus Optimism Trade' is back
Around the world, major fiat currencies are looking at major devaluation.
In the US, a stimulus deal is in the works with a bipartisan group of lawmakers in discussions for $900+ billion deal to stimulate the economy. Last month's jobs report showed that economic recovery is slowing down. This may have tipped Democrats and Republicans to considering more stimulus.
On the other side of the Atlantic, the EU has been working on a stimulus deal. However, the plan may flop as Hungary & Poland threatening to veto the deal. Reports from Brussels say that policymakers are working to circumvent the two countries. Should the deal go through, the EURO will be under pressure.
Japan's Suga run into problems with convincing lawmakers in the country to approve a $900b deal. His approval ratings are low as second wave of coronavirus spreads in Japan. However, this will put more pressure on lawmakers to pass the stimulus bill.
What's up with Central Banks?
The FED, ECB & BOJ are expected to keep rates low this month. These banks also hold an unprecedented level of assets in form of treasuries and stocks. They won't stop buying until they are convinced that recovery has been achieved.
Why is all these important?
The DXY, EURO & JPY are some of the most used currencies in the world. The actions by governments around the world will devalue currencies leaving metal Commodities as the best safe havens. I expect XAUUSD to break the ATHs in 2021 through to 2023.
Around the world, major fiat currencies are looking at major devaluation.
In the US, a stimulus deal is in the works with a bipartisan group of lawmakers in discussions for $900+ billion deal to stimulate the economy. Last month's jobs report showed that economic recovery is slowing down. This may have tipped Democrats and Republicans to considering more stimulus.
On the other side of the Atlantic, the EU has been working on a stimulus deal. However, the plan may flop as Hungary & Poland threatening to veto the deal. Reports from Brussels say that policymakers are working to circumvent the two countries. Should the deal go through, the EURO will be under pressure.
Japan's Suga run into problems with convincing lawmakers in the country to approve a $900b deal. His approval ratings are low as second wave of coronavirus spreads in Japan. However, this will put more pressure on lawmakers to pass the stimulus bill.
What's up with Central Banks?
The FED, ECB & BOJ are expected to keep rates low this month. These banks also hold an unprecedented level of assets in form of treasuries and stocks. They won't stop buying until they are convinced that recovery has been achieved.
Why is all these important?
The DXY, EURO & JPY are some of the most used currencies in the world. The actions by governments around the world will devalue currencies leaving metal Commodities as the best safe havens. I expect XAUUSD to break the ATHs in 2021 through to 2023.
