Euro Extends Gains versus the Greenback, is Georgia the cause?
The beginning of 2021 proved to be no respite for bulls expecting a greenback recovery. Jan 4 USD gains, for instance, were quickly reversed ahead of Georgia's Senate runoff election on Jan 5. After weeks of poll watching and political wrangling, markets are once more focused on the Georgia poll. Depending on winners (and losses), the EUR could extend last year's gains or slump, as the USD finds temporary support.
The United States, like the rest of the globe, is in shambles, politically and economically. After the Nov 3 high stake election that tilted tables in favor of Joe Biden, the stock market could pump higher once the president-elect is confirmed. On the other hand, traders are watching the poll outcomes from Georgia. If a Republican candidate wins, the opposition will be in control since they control 51 Senate seats versus Democrats 48. A win will consolidate Biden's win, giving his administration latitude to implement some of their ambitious policies, including more fiscal stimuli. Their win, therefore, bodes negatively for the greenback, and the currency may tumble in the medium term.
Impact on the USD Price:
Bearish. Activation of more billions and helicopter drops washes down the world's reserve currency purchasing power, causing outflow, which is bearish for the fiat but bullish for the stock market.
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