Forex market News: New hopes for an additional US stimulus package and the start of the COVID-19 vaccine deployment in the UK and US are expected to be the main focus of the foreign exchange market this week.
As pressure mounts, lawmakers on Capitol Hill may have to launch a new round of negotiations to discuss additional bailout packages to help millions of workers and businesses struggling with the disease. .
Pharmaceutical companies and governments of many countries are also actively implementing the distribution of COVID-19 vaccine, for example in the US and UK.
In Europe, Brexit negotiations are coming to an end and at the next policy meeting on December 10, the European Central Bank (ECB) is likely to expand its existing economic stimulus program to to support the euro zone economy.
Investing.com has summarized some of the events that could have a significant impact on the forex market this week as follows:
1. Will the US Congress negotiate an additional bailout package?
The November employment report showed that the US labor market created only 245,000 jobs, much lower than expected 440,000 and threatened to slow the recovery of the US economy.
The lowest job growth in the past six months has made investors expect that the US Congress will pass a fiscal stimulus bill to help restore the economy. If Congress does not act quickly, more than 13 million workers will lose unemployment benefits on December 26.
Earlier last week, a group of bipartisan lawmakers proposed a bailout package worth $ 908 billion. However, it is not clear if Senate Majority Leader Mitch McConnell would support such a large bailout as he seems to want only about $ 500 billion.
In addition, the US bipartisan will also face another deadline on December 11 to pass the budget bill of 1,400 billion USD or accept the risk of a government shutdown.
Political analysts believe that the two events above may be related, but the National Assembly may also pass a budget expenditure bill without including additional fiscal stimulus.
2. Implementation of COVID-19 vaccine begins
This week, the UK will be the first country to launch a vaccine developed by pharmaceutical firms Pfizer and BioNTech.
The UK is expected to receive the first doses of the vaccine on December 8, with priority given to seniors over 80 years old, front line health care workers, home health care workers and other Other population groups.
The UK government approved the emergency use of Pfizer’s vaccine last week, making it the first country to start a historic broad COVID-19 vaccination program.
In the US, on December 10, the Food and Drug Administration (FDA) will vote on whether to allow emergency use of Pfizer’s vaccine. The government could then launch the initial vaccination as early as December 11 with the hope that some 20 million people will have access to the vaccine by the end of this year.
3. Brexit negotiations come to an end
Negotiators from Britain and the European Union (EU) held final discussions on December 6 to reach a post-Brexit trade deal before the transition agreement ends on 31st. twelfth.
If the two sides do not come to a consensus, the five-year Brexit event will end in chaos as the UK and EU are doing to control the economic damage caused by the COVID-19 pandemic.
Experts warned that the prospect of no deal would cause major disruption to the UK economy in the long term. The EU is currently Britain’s largest trading partner, accounting for nearly 47% of the country’s trade turnover in 2019.
According to the UK’s Office of Budget Responsibilities, if the two sides do not reach an agreement, the pound will suffer and UK GDP could drop by another 2% in 2021. At the same time, inflation could also increase. .
4. ECB announces stimulus expansion: Forex Market
The euro economy will fall into recession again in the fourth quarter. In that context, ECB Chairman Christine Lagarde is expected to announce another fiscal stimulus package on December 10.
In November, the inflation rate of the EU economy was negative for the fourth consecutive month, indicating that this situation could last longer than the experts feared.
Inflation is likely to be the main topic of discussion at the ECB’s December 10 policy meeting as policymakers are increasingly concerned that a deep and prolonged recession will lead to de-escalation factors. show up more often.