US Dollar Softens as Biden Proposes $2-Trillion Spending Package
US DOLLAR WEAKENS SLIGHTLY AS PRESIDENT BIDEN REVEALS $2-TRILLION INFRASTRUCTURE SPENDING PACKAGE
- President Biden announces plans for $2-trillion in new infrastructure spending
- US Dollar softens slightly as the broader DXY Index sheds -0.1% on the session
- Treasuries remain under pressure with the ten-year yield trading around 1.75%
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The US Dollar softened a bit across major currency pairs throughout most of Wednesday’s session, but the Greenback erased initial weakness as trading progressed. This left the broader DXY Index little changed with US Dollar strength against the Yen offsetting weakness versus the Pound. EUR/USD price action whipsawed lower to finish flat on the day with US outperformance likely reinforced by France entering a month-long nationwide lockdown. Not to mention, the US Dollar could also be reacting to firming Treasury yields as the ten-year contends with 175-basis points. This likely comes on the heels of President Joe Biden unveiling $2-trillion in government spending plans on infrastructure.
New infrastructure investments are said to be allocated over an eight-year period, which will target transportation, broadband internet access, manufacturing, elderly care, and clean energy. To help pay for the infrastructure spending, President Biden proposed raising the corporate tax rate to 28%. Biden also said that the it will have two parts: the American jobs and American families plan. The second half of his plan will be announced in a few weeks.
US DOLLAR INDEX PRICE CHART WITH TEN-YEAR TREASURY YIELD OVERLAID: 15-MINUTE TIME FRAME (31 MAR 2021 INTRADAY)
The US Dollar was little changed in immediate reaction to President Biden speaking on his infrastructure spending package, though the broader DXY Index did dip slightly. While Biden’s speech is crossing market wires after the close on Wall Street, which is typically a period of low liquidity, the infrastructure spending plan announcement was expected and largely priced in. Looking ahead, US Dollar volatility could accelerate around upcoming employment data due with jobless claims and nonfarm payrolls scheduled for release this Thursday and Friday respectively at 12:30 GMT.
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