The 2 Trillion Dollar Medication

Congress has just approved a USD2.2 trillion stimulus package to the US economy - the largest in history. It is hoped that this much-needed shot in the arm is the cure for the sick American economy.

The strong rally in global equity markets yesterday, suggests the "risk on" phase s back and will more than likely be supported by the recently re-established QE programmes by the major central banks, which have gone into full swing this week, along with leading market investors suggesting equities offered good long-term value at the lower levels.

The has led to a recovery of the rest of the world's currencies which had touched multi-decade lows.

It is a very quiet data calendar today, as the US PCE inflation and consumer spending data is for February and backward looking. The University of Michigan consumer sentiment numbers are final readings, after the initial estimate produced a five month low. This update, which will include data collected until the 24th March (compared to 11th March for initial data) is likely to show a much larger decline.

Analysts are cautious on whether the recovery of world currencies indicates a complete turnaround. That is because for all the major economies - except China - the trajectory of the disease is still upward. Therefore the short-term - never mind the long-term - effects are far from certain.

See you next week!

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None of the information in this article is, nor should be construed as financial advice. All foreign exchange transactions involve risk and you should always seek your own independent financial advice before entering into any foreign exchange transaction.