US Market Open: Waiting on US fiscal stimulus and Brexit clarity

US indices are pointing to a flat open as traders eye fiscal stimulus negotiations in Washington.

Quiet session 1

  • US markets are poised to open near flat as US fiscal stimulus negotiations remain in flux
  • European indices are ticking higher in relatively quiet pre-holiday week trade.
  • The Bank of Japan left policies unchanged and did not seem particularly concerned with the yen’s recent appreciation
  • Sterling and the euro are consolidating their recent gains against the US dollar.
  • Both oil and gold are similarly quiet as traders wait for clarity on negotiations on both sides of the Atlantic.

US indices to open at new record highs

The S&P 500 is poised to open 0.1% higher today at 3718.

The Dow Jones is set to open essentially flat at 30,211.

Start trading the opportunities with indices today.

All eyes remain on US stimulus negotiations

After a marathon negotiating session last night, the much-discussed US fiscal stimulus bill continues to grind slowly toward an agreement. As it stands, the two sides are at an impasse over Democrat requests for federal funds to match 100% of FEMA payouts for pandemic-related disasters and Republican demands to end the Federal Reserve’s emergency lending program. Adding an element of uncertainty to the proceedings, government funding is set to run out tonight, so traders will be focused on whether that deadline can make a deal happen, or whether a short-term stopgap bill is in play.

FDA approves Moderna’s vaccine

As anticipated, the US Food and Drug Administration (FDA) approved Moderna’s COVID-19 vaccine for emergency-use authorization. The company has indicated its on track to provide 20M doses this month and up to 100M doses to the US in Q1 2021. While multiple vaccines are now being distributed, the pandemic continues to ravage the globe at an unprecedented rate, with restrictions likely to remain in place well into 2021.

European indices edge higher in quiet trade

European indices are edging higher as of midday Friday, though volatility remains low amidst pre-holiday week trade and political wrangling on both sides of the Atlantic.

The Euro STOXX Index traded 0.1% higher midday.

France’s CAC 40 was essentially flat, while Germany’s DAX had was rising 0.4% to 13719. The index is now at its highest level since February 2020, representing the recovery of nearly all of its pandemic-induced losses this year.

Meanwhile, over the Channel, the FTSE 100 was ticking up 0.2% as investors held out hope for a Brexit negotiation breakthrough over the weekend.

Bank of Japan makes no major changes, as expected

The Bank of Japan (BOJ) made no major changes to monetary policy, as widely expected. The only tweak was an extension to the central bank’s funding package. In his comments, BOJ Governor Kuroda vowed to explore why the BOJ has failed to hit its 2% inflation target (for the past 20+ years!). Most importantly for FX traders, Kuroda noted that there is "no need to think that the yen rise is having serious effects on the economy" essentially ruling out intervention or “jawboning” to push the yen lower in the immediate future.

Forex: Sterling dips, greenback and euro edge higher

GBP/USDtraded at 1.3542 at midday, down 0.3% on the day to consolidate its 300-pip rally so far this week.

EUR/USD was essentially flat at 1.2266, holding steady at its highest level since April 2018.

Start trading the opportunities in the forex market today.

Commodities: Oil and gold hold their ground

Mirroring the slow trade in other markets, both Brent and WTI were trading near flat ahead of the US open. The two contracts remain in a holding positioning pending clarity on near-term catalysts including the prospects for a Brexit deal and US fiscal stimulus.

Start trading the volatility in oil prices today.

Gold also consolidated in the upper $1800s as precious metals traders were hesitant to push prices above the $1900 level, wary of the potential for slow holiday trading in the coming weeks.

Start trading gold and other precious metals today.  

Market-moving events in the economic calendar

The economic calendar is quiet today, with just retail sales out of Canada at 8:30 ET (12:30 GMT) on tap. Traders will be more focused on headlines around Brexit and fiscal stimulus negotiations.

You can view all the scheduled events for today using our economic calendar, and keep up to date with the latest market news and analysis here.


More from Indices

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.