House Votes In Stimulus

The latest news out of Washington overnight is that president Biden is pushing ahead with his aims of passing a $1.9 trillion COVID relief package. The news comes on the back of Republicans earlier this week floating a much reduced $600 billion figure. However, despite the option to negotiate and potentially deliver a reduced version of his proposed package, Biden is reportedly pushing ahead without the support of Republicans.

In a vote held in the lower chamber of Congress last night, the bill was approved 218 - 212, with democrats using their majority to get the bill passed. The measures, which include $1,400 direct stimulus checks for a million Americans, $350 billion for municipal aid as well as extra funding for items such as a minimum wage increase to $15.

Senate Vote Next

The bill will still need to pass the Senate to become law, however, given the majority the democrats have their too it should be pushed through. However, the issue Biden faces now is that having pledged a more bi-partisan approach over the course of his campaign, Biden has abandoned this pledge at the first hurdle. This might be ok while his party holds both chambers of Congress, but should the republicans regain either chamber during the midterms, this could then complicate his presidency if republicans opt to be difficult as payback.

However, Biden has been clear in his calls for the urgent need for action given the sprawling problems stemming from the economic harm caused by the pandemic such as drug addictions and suicides as well as the general hardship millions are facing.

There are fears that some more moderate democrats in the senate might vote against the bill given their reservations over some of the more controversial items such as the minimum wage increase though, given the overall sentiment within the party and that this is the new president's first major action in Congress, it looks likely to go through.

USD Higher Ahead of NFPS

Despite the news, the US Dollar is continuing to squeeze higher against most of its G10 counterparts today. Looking ahead, the next big hurdle for the Dollar will be the labour reports due on Friday which appear highly likely to show a continuation of the jobs losses seen in December and could take the wind out of the Dollar's sales.

Technical Views

DXY

The rally in the Dollar Index has seen price breaking firmly above the 90.50 level. Price is now fast approaching a test of the 91.74 level resistance along with the bear channel top. This will be a major test for USD bulls and a break higher here could spark a bigger bullish reversal.

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