25.03.2020: Dollar bulls encouraged by Fed stimulus (USDХ, DJIA, USD/CAD)

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The US stock indexes have rebounded from record lows, but this fragile recovery could collapse anytime soon. Investors are cautiously optimistic now. Bearing in mind unprecedented fiscal stimulus launched by the US Fed, traders are careful about buying the US currency. So, the US dollar index has been declining for the third session in a row.
On Wednesday, the US stock market performed a historic rally in anticipation of a coronavirus stimulus deal by Congress. The rally is viewed as a response to the Fed’s move to provide global financial markets with unlimited liquidity. Yesterday, the Dow Jones showed the sharpest 11% spike over 87 years. The White House and the Senate reached an agreement on the financial aid package worth 2 trillion dollars. The vote is scheduled for today. The bill is likely to be approved.
Meanwhile, Wall Street has pulled back slightly following yesterday’s spike. The news on the pandemic scale does not improve market sentiment. Investors are worried by fast rates of new coronavirus cases in the US. The Dow Jones opened the New York trade at near 20,704.
The panic has calmed down. Nevertheless, it is too early to speak about a steady recovery. Market participants have not reckoned yet the extent of the fallout to the global economy. Stimulus measures launched jointly by leading central banks will hardly be able to offset the damage in full.
Apart from the dismal prospects of the global economy, investors are more concerned about a shelter for their savings. The US dollar has justified its status of a safe haven asset. No wonder, demand for the US currency is still buoyant. Its index has settled down at about 101.4. However, the US dollar is extending broad-based strength. Besides, dollar bulls are encouraged by aggressive measures from the Federal Reserve.
The Canadian dollar is trading at the level slightly above 1.43 against its American rival. Mixed dynamics of oil prices do not allow the loonie to assert strength or at least to regain losses. In the New York trade, the USD/CAD pair is trading a bit lower, but this should not be considered a trend reversal. In midday, benchmark oil grades dropped again ahead of a weekly update on US oil inventories from the Energy Information Administration. Brent crude sank below 26 US dollars a barrel.

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