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SquaredCommentary: 19th January 2021


19 January 2021

Risk sentiment bounced back a little overnight and this morning from Mondays sell off.  With no fresh drivers, markets feel a bit directionless, and after the US holiday we are just recovering the   risk off moves.

Drivers


It feels like the market remains wary of risk sentiment in the short term with the virus situation deteriorating across most of the world.  Once inaugurated Biden may have plans for tougher restrictions in the US which could weigh on risk sentiment in the short term.  Also, vaccine roll outs are proving more difficult than expected and likely to take longer than initial estimates.

The Yellen testimony is due today.  Much of what she will say has already been leaked.  With regards to fiscal policy, she is expected to say: “But right now, with interest rates at historic lows, the smartest thing we can do is act big,” as she tries to sell Biden’s proposed $1.9tn stimulus package. She is also expected to reaffirm the US commitment to a market determined exchange rate for the dollar.

It is not yet clear when congress will vote on Biden’s proposed stimulus package.  Biden and Harris will need to be sworn in on 20th Jan before Senate control passes over to the Democrats.  Then Yellen, once confirmed, should be able to help push to get Biden’s relief package through.

Biden is expected to cancel the license of the Canadian Keystone XL oil project.  The move is expected after Biden promised to do so during his campaign. Confirmation will be a blow to Alberta and likely to cost taxpayers over 1bn CAD.


Numbers to Watch


Market Updates

Rony Nehme - Chief Market Analyst at SquaredFinancial


Rony has over twenty years of experience in financial planning and professional proprietary trading in the equity and currency markets. Prior to joining SquaredFinancial, Rony educated and coached numerous traders helping them find their edge and arming them with proven trading methodologies to successfully battle the markets. Rony obtained a B.S. in Finance from Concordia University in Montreal, and his professional designations include Certified Financial Planner CFP® obtained from the Canadian Securities Institute.

#source

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