“We have a deal”! US infrastructure agreement reached
Joe Perry June 24, 2021 4:19 PM
The infrastructure spending bill equals more stimulus for the economy
US President Joe Biden announced that Democrats and Republicans have reached a bi-partisan infrastructure deal worth roughly $1.2 trillion over 8 years. The deal includes infrastructure spending on such physical items as roads, bridges, pipes and broadband internet, however, excludes many of the social reform issues that Biden was hoping for, such as childcare and climate change (human infrastructure). The package is said to include $579 billion in new spending which will be paid for by the sale of strategic petroleum reserves, 5G spectrum auction proceeds, extending expiring customs user fees and redirected covid funds. In addition, Biden will look to pass legislation regarding human infrastructure separately though reconciliation, in which the Senate would only need a 50-50 vote, with Vice-President Kamala Harris casting a deciding vote. In it’s current form, tax increases are not included as a means of paying for the bill!
What stock market wouldn’t love the idea of more government spending without new taxes? More spending equals more stimulus! The S&P 500 put in all-time new highs again today a near 4273.2. The next resistance level is isn’t until the 127.2% Fibonacci extension from the highs of May 7th to the lows of May 13th, near 4329.6. Above there, resistance is at the upward sloping trendline near 4380. Support is at the previous high of 4266.7, the upward sloping trendline from October 2020 near 4220, and the 50 Day Moving Average at 4192.
Source: Tradingview, FOREX.com
The US Dollar Index (DXY) had already been pulling back since putting in recent highs on June 18th at 92.41. However, on the 60-minute timeframe, the DXY had been moving higher earlier in the day. More spending equals more Dollars in the system, which means a lower value of the US Dollar. Therefore, the price of DXY pulled back from trendline resistance towards the 50% retracement on the day. Further intraday support is at the day’s lows near 91.66 and then the lows from June 23rd near 91.51. Resistance is at today’s highs, which confluence with the top, downward sloping trendline near 91.90 and then the June 22nd highs near 92.12.
Source: Tradingview, FOREX.com
As news continues to trickle out surrounding the infrastructure spending plan, watch for any “zingers” which may have been omitted from the initial statement release (such as an increase in taxes). Otherwise, the spending bill equals more stimulus for the economy, which should be good for stock market bulls and US Dollar bears!
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.